Consider the Multiple Regression Model with Two Regressors X1 and X2,where

question 33

Multiple Choice

Consider the multiple regression model with two regressors X1 and X2,where both variables are determinants of the dependent variable.When omitting X2 from the regression,then there will be omitted variable bias for

• A)if X1 and X2 are correlated
• B)always
• C)if X2 is measured in percentages
• D)if X2 is a dummy variable

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Definitions:

Plant Size

Refers to the physical capacity or output level of a manufacturing or production facility.

Output Levels

The quantity of goods or services produced by a company, sector, or economy in a given period of time.

Long Run

A period in economics where all factors of production and costs are variable, allowing full adjustment to any change in economic conditions.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduced cost per unit of output.