The Extended Least Squares Assumptions in the Multiple Regression Model

question 24

Multiple Choice

The extended least squares assumptions in the multiple regression model include four assumptions from Chapter 6 (ui has conditional mean zero; (Xi,Yi) ,i = 1,…,n are i.i.d.draws from their joint distribution;Xi and ui have nonzero finite fourth moments;there is no perfect multicollinearity) .In addition,there are two further assumptions,one of which is

• A)heteroskedasticity of the error term.
• B)serial correlation of the error term.
• C)homoskedasticity of the error term.
• D)invertibility of the matrix of regressors.

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Definitions:

Variable Costing

A costing method that includes variable manufacturing costs—direct materials, labor, and variable overhead—in the cost of production.

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing, such as direct materials, direct labor, and variable as well as fixed manufacturing overhead, in the pricing of a product.

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and allocated overhead, crucial for pricing and profitability analysis.

Variable Costing

A costing method that includes only variable costs (costs that change with production volume) in product costs and treats fixed costs as period costs.