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In the Model Y = β0 + β1x + β2d

question 49

Multiple Choice

In the model y = β0 + β1x + β2d + β3xd + ε,the dummy variable and the interaction variable cause ____________________________________.


Definitions:

Profit Maximizing

The process of finding the level of output where a firm achieves the maximum possible profit.

Kinked Demand Curve Model

Oligopoly model in which each firm faces a demand curve kinked at the currently prevailing price: at higher prices demand is very elastic, whereas at lower prices it is inelastic.

Rivals' Price

The cost set by competing businesses for similar products or services in the market.

Marginal Cost

The additional cost associated with producing one more unit of output.

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