In which of the following cases OLS estimation of Healthcare=a+bAge+u will be biased?a) Only include in your estimation sample individuals whose health care spending is more than 500 per year.b) Use a random sample.c) Healthcare is recorded with some random typing errors.d) The error variance is larger at an older age.

Question
Asked Nov 4, 2019
3 views

In which of the following cases OLS estimation of Healthcare=a+bAge+u will be biased?

a) Only include in your estimation sample individuals whose health care spending is more than 500 per year.

b) Use a random sample.

c) Healthcare is recorded with some random typing errors.

d) The error variance is larger at an older age.

check_circle

Expert Answer

Step 1

To identify the case in which the OLS estimation of Healthcare=a+bAge+u will be biased

Step 2

OLS method is used to find the unknown parameters in the linear regression model. In the Ordinary Least Square (OLS) method, the focus is on finding a model that fits closely to the whole population and not restrict itself to some particular...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Related Economics Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: Assume agricultural products are identical and there are many sellers and buyers of agriculture prod...

A: If agricultural products are identical with many sellers and buyers in the market, this market is a ...

question_answer

Q: Firms A and B are contemplating whether or not to invest in R&D. Each has two options: “Invest” ...

A: I) If Firm A and Firm B invest, there is a 0.25 probability that Firm A will become a monopolist and...

question_answer

Q: Draw some indifference curve for piza and pepsi expalin of these indifference curve?

A: An indifference curve is a graphical representation of different combinations of two commodities tha...

question_answer

Q: 7. LO 2, 4 Suppose that a consumer can earn a higher wage rate for working overtime. That is, for th...

A: Let the consumer has two goods to consume, consumption (C) and leisure (l). The consumer’s budget co...

question_answer

Q: MonopolistRefer to the table. What is the monopolist's profit-maximizing level of output?    ...

A: Click to see the answer

question_answer

Q: In Goa, India, the multiplier effect of iron ore exports is calculated to be 1.62 (Ta, 2003). Calcul...

A: As the multiplier effect is calculated as 1.62, So the impact of additional 1,000 rupees of iron ore...

question_answer

Q: Lauren's salary decreases from $40,000 to $30,000. She decides to reduce the number of outfits she p...

A: The income elasticity of demand is the responsiveness of quantity change due to change in income.Mat...

question_answer

Q: Consider the product of gasoline. Its PES is estimated at 1.6. Which of the following would be true?...

A: (1) If the price elasticity of supply is 1.6 means, the price elasticity of supply is elastic. That ...

question_answer

Q: MNLOGS harvested logs (with no inputs from othher companies) from their property in northern Minneso...

A: Value added by a firm is the difference between revenues earned by the firm and cost it incurs.