Suppose the Variable Has Been Omitted from the Following

question 14

Multiple Choice

Suppose the variable has been omitted from the following regression equation, is the estimator obtained when is omitted from the equation. If is said to _____.

• A)have an upward bias
• B)have a downward bias
• C) be unbiased
• D) be biased toward zero

---

Definitions:

Inputs

Resources used in the production process, including labor, capital, and materials.

Outputs

Goods and services of value to households.

Explicit Costs

Payments made directly to external parties as part of business operations, including salaries, rental fees, and the cost of goods.

Implicit Costs

are indirect expenses that do not involve a direct payment of money but represent a loss of opportunity to use resources elsewhere.