Heteroscedasticity Occurs When

question 45

Multiple Choice

Heteroscedasticity occurs when:

• A) the variance of the random error is non-constant over the sample.
• B) the regression coefficient estimates are highly unstable.
• C) the random errors are correlated over time.
• D) two or more explanatory variables are highly correlated.
• E) the dependent and the explanatory variables are highly uncorrelated.

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Definitions:

Regional

Pertaining to or characteristic of a specific geographic area or division, often considered in terms of economic, political, or cultural distinctions.

Local Levels

Pertains to activities, governance, or administration executed at a community, town, or city scale, focusing on the immediate geographical area.

Diseconomies of Scale

A situation in which a firm experiences an increase in average costs due to an increase in its size or output level, often resulting from inefficiencies and higher per unit costs.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.