The Number of Dummy Variables Representing a Qualitative Variable Should

question 51

Multiple Choice

The number of dummy variables representing a qualitative variable should be ________.

• A) one less than the number of categories of the variable
• B) two less than the number of categories of the variable
• C) the same number as the number of categories of the variable
• D) None of these choices is correct.

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Definitions:

Market Efficiency

A condition in which all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market.

Equilibrium Price

The price in the market where the amount of products offered matches the amount of products desired.

Socially Optimal

A condition or outcome that is most efficient and beneficial for society as a whole, often considered in economic policies and strategies.

Tobacco Industry

A sector comprising companies that grow, manufacture, and sell tobacco products.