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: Cengage Learning
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Question
Chapter 4A, Problem 1E
a)
To determine
To find: The possibility of the cause of autocorrelation.
a)
Expert Solution
Explanation of Solution
The causes of autocorrelation are:
1. Bias in the data
2. The data is not reliable there must be some change in the data.
b)
To determine
To find: The effect of autocorrelation.
b)
Expert Solution
Explanation of Solution
The results are:
1. two or more independent variables are correlated, i.e., multicollinearity.
2. the function might be sometimes non-linear.
c)
To determine
To find: the affect of autocorrelation on the accuracy of
c)
Expert Solution
Explanation of Solution
- autocorrelation might underestimate the true variance.
- The null hypothesis might be rejected although it is true.
d)
To determine
To find: remedial for autocorrelation removal
d)
Expert Solution
Explanation of Solution
The remedy is to increase the number of observations, find the missing values and estimators although linear is not the efficient estimator.
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Chapter 4A Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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