Cause-And-Effect Direction Between X and Y May Be Determined by Running

question 76

True/False

Cause-and-effect direction between X and Y may be determined by running the regression twice and seeing whether Y = β₀ + β₁X or X = β₁ + β₀Y has the larger R².

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Definitions:

Marginal Output

The additional amount of output that is produced as a result of a one unit increase in the input of a production process.

Resource

Assets, materials, or inputs used to produce goods and services, including natural resources, human resources, and capital.

AVC Curve

Represents the Average Variable Cost Curve, which shows the relationship between a firm's output and the variable costs per unit of output, typically declining and then rising.

AFC Curve

The Average Fixed Cost curve, which represents the fixed costs of production divided by the quantity of output produced, typically demonstrating a downward slope as output increases.