Two Series Are Said to Be Cointegrated If

question 22

Multiple Choice

Two series are said to be cointegrated if:

• A)both series are I(1) but a linear combination of them is I(0).
• B)both series are I(0) but a linear combination of them is I(1).
• C)both series have the same set of explanatory variables but a different dependent variable.
• D)both series have the same dependent variable but a different set of explanatory variables.

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Definitions:

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as output level changes, typically downward sloping for firms in competitive markets.

Economic Profits

Profits exceeding the opportunity costs of all resources used in production, indicating the firm is earning more than the minimum required to stay in business.

Monopolist

A single seller in a market who has significant control over the supply and price of a particular product or service.

Profit-maximizing Quantity

The level of output at which a company makes the highest profit, where marginal cost equals marginal revenue.