Answered: Which of the following statements is…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 4E

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Question

Which of the following statements is true?

a) None of the other possible answers are true.

b) Under the Classical Linear Model assumptions, the OLS estimator has the highest variance among unbiased estimators.

c) Taking the natural log of a non-normal distribution often yields a distribution that is closer to normal.

d) The Central Limit Theorem (CLT) assumes that the dependent variable is unaffected by unobserved factors.

e) The mean of a non-normal distribution is 0 and the variance is σ².

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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