Author Question: A regression specification must include A) the functional relationship between dependent and ... (Read 118 times)

schs14 · **on:** Jul 1, 2018

A regression specification must include

A) the functional relationship between dependent and explanatory variables.
B) the estimated coefficients.
C) the estimated t-statistic.
D) All of the above.

Question 2

A good salesperson can sell 100,000 worth of goods, while a poor one can sell only 10,000 worth of goods. Job applicants know if they are good or bad, but the firm does not.

A firm will offer job applicants a choice between a fixed salary of 2,000 or a commission on the sale. Assume risk-neutral salespersons and no opportunistic behavior. Given that the firm wants to distinguish a prospective good salesperson from a poor one, what should be the commission on sales? A) Commission should be larger than 50.
B) Commission should be larger than 40.
C) Commission should be between 2 and 20.
D) Commission should be smaller than 2.