Supposing you are a researcher studying the role of factor combination on output of firms in the pharmaceutical industries. You pick out labor and capital as the proxies for the input factors. To do you econometric analysis, you pick out the Cobb-Douglas Production function below, to model this relationship Y = go+KB₁
Supposing you are a researcher studying the role of factor combination on output of firms in the pharmaceutical industries. You pick out labor and capital as the proxies for the input factors. To do you econometric analysis, you pick out the Cobb-Douglas Production function below, to model this relationship Y = go+KB₁
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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![QUESTION ONE
Supposing you are a researcher studying the role of factor combination on output of firms in the
pharmaceutical industries. You pick out labor and capital as the proxies for the input factors. To do you
econometric analysis, you pick out the Cobb-Douglas Production function below, to model this
relationship
Y = @Bo+HKB₁
Where Y= units of output, K= Capital input
a) Explain why OLS method of regression analysis will yield spurious results if the analysis was
to be based on the specified model above?
b) Suggest remedies to correct this anomaly and illustrate your proposed solution on the same.
c) Supposed the data collected during the process of research is as follows:
OUTPUT (Y)
CAPITAL K
20
16
9
5
7
8
13
6
18
16
9
8
Explain the implication of your analysis based on your answer in (ii) and illustrate.
d) Perform a linear regression analysis and interpret your results and test for significance of
regression
e) How Much Variation in the dependent variation has been explained in the model?
f) Suggest atleast for conditions to be met for your results in d) to be relied upon.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdedad78d-d8a9-40f4-a6eb-8e319615c874%2Fd0de9445-c800-4598-9f99-071fdf8ed477%2Ffcd20ah_processed.png&w=3840&q=75)
Transcribed Image Text:QUESTION ONE
Supposing you are a researcher studying the role of factor combination on output of firms in the
pharmaceutical industries. You pick out labor and capital as the proxies for the input factors. To do you
econometric analysis, you pick out the Cobb-Douglas Production function below, to model this
relationship
Y = @Bo+HKB₁
Where Y= units of output, K= Capital input
a) Explain why OLS method of regression analysis will yield spurious results if the analysis was
to be based on the specified model above?
b) Suggest remedies to correct this anomaly and illustrate your proposed solution on the same.
c) Supposed the data collected during the process of research is as follows:
OUTPUT (Y)
CAPITAL K
20
16
9
5
7
8
13
6
18
16
9
8
Explain the implication of your analysis based on your answer in (ii) and illustrate.
d) Perform a linear regression analysis and interpret your results and test for significance of
regression
e) How Much Variation in the dependent variation has been explained in the model?
f) Suggest atleast for conditions to be met for your results in d) to be relied upon.
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