Two of the Most Important Econometric Concepts to Date Have

question 4

Essay

Two of the most important econometric concepts to date have been the stochastic error term and the residual. Carefully distinguish between these two concepts, being sure to:
(a) Define both terms.
(b) State how they are similar.
(c) State how they are different.
(d) Give an example of an equation that contains a stochastic error term.
(e) Give an example of an equation that contains a residual.

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Definitions:

Creative Deviance

Defying orders by management to stop working on a creative idea.

Open Innovation

The use of web-enabled input from external sources to facilitate innovation.

Intensive Collaboration

A deeply cooperative effort involving close and sustained interaction among participants to achieve a common goal.

External Parties

Individuals or organizations outside of an organization who can be affected by its activities or who can impact the organization's performance.