Author Question: How is the R2 value calculated, and what information does this give you? What will be an ideal ... (Read 56 times)

joblessjake

  • Hero Member
  • *****
  • Posts: 555
How is the R2 value calculated, and what information does this give you?
 
  What will be an ideal response?

Question 2

In terms of cost-benefit analysis, explain why a competitive market with an externality produces too much pollution.
 
  What will be an ideal response?



vkodali

  • Sr. Member
  • ****
  • Posts: 357
Answer to Question 1

R2 = RSS/TSS = 1 - (ESS/TSS), where TSS = sum of squared deviations of the sample values of Y from their mean, RSS = sum of squared deviations of the estimated values from their mean, and ESS = sum of the squared deviations of the sample values from their estimated values. The R2 value tells you what percentage of the variation in the dependent variable is explained by variation in the independent variables, or the goodness of fit of the equation. In this case, 65 of the variation in quantity demanded is explained by variation in the independent variables.

Answer to Question 2

At the socially optimal level of production, welfare is maximized and the marginal benefit from less pollution equals the marginal cost of less output. However, a competitive market with an externality produces more pollution than is socially optimal, and the marginal cost of less output is greater than the marginal benefit from less pollution.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Did you know?

Looking at the sun may not only cause headache and distort your vision temporarily, but it can also cause permanent eye damage. Any exposure to sunlight adds to the cumulative effects of ultraviolet (UV) radiation on your eyes. UV exposure has been linked to eye disorders such as macular degeneration, solar retinitis, and corneal dystrophies.

Did you know?

When intravenous medications are involved in adverse drug events, their harmful effects may occur more rapidly, and be more severe than errors with oral medications. This is due to the direct administration into the bloodstream.

Did you know?

Though newer “smart” infusion pumps are increasingly becoming more sophisticated, they cannot prevent all programming and administration errors. Health care professionals that use smart infusion pumps must still practice the rights of medication administration and have other professionals double-check all high-risk infusions.

For a complete list of videos, visit our video library