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Suppose That the Following Regression Equation Best Describes the Co-Movement i=1NeiN\frac { \sum _ { i = 1 } ^ { N } e _ { i } } { N }

Question 31

Multiple Choice

Suppose that the following regression equation best describes the co-movement between Sales, Price and Number of Competitors: Salesi = B + M1Pricei + M2NumCompi. What moment condition would not be used to yield a consistent estimate of B, M1, M2?


A) i=1NeiN\frac { \sum _ { i = 1 } ^ { N } e _ { i } } { N } = 0
B)

i=1N( Sales ibm1 Price im2 Num Comp i)  Price iN \frac{\sum _ { i = 1 } ^ { N } \left( \text { Sales } _ { i } - b - m _ { 1 } \text { Price } _ { i } - m _ { 2 } \text { Num Comp } _ { i } \right) \text { Price } _ { i }}{N} = 0
C)


i=1N( Sales ibm1 Price im2 NumComp i) N \frac{\sum _ { i = 1 } ^ { N } \left( \text { Sales } _ { i } - b - m _ { 1 } \text { Price } _ { i } - m _ { 2 } \text { NumComp } _ { i } \right) }{N} = 0
D)

i=1N( Sales ibm1 Price i)  Price iN \frac{\sum _ { i = 1 } ^ { N } \left( \text { Sales } _ { i } - b - m _ { 1 } \text { Price } _ { i } \right) \text { Price } _ { i }}{N} = 0

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