Econometric Proposal Case Solution
It is stated by many scholars that the choice of independent and dependent variables tends to involve a number of vital decisions. The regression analysis studies the processes that primarily produces the empirical economic results (Stanley, 2005). The independent variables is one that is controlled or changed in a scientific experiment in order to find dependent variable effects. In contrast, the dependent variable is being measured and tested in scientific experiment. In economic terms, price can be independent and quantity demanded can be dependent variable. The hypothesis testing is widely used to determine probability that the hypothesis is true or not. The null hypothesis states that there is no significance between dependent and independent variable. In case of significant relationship between variable the null hypothesis would be rejected or vice versa. It is to summarize that one of feature, the standard coefficient error affected tends to be large. Testing hypothesis that the zero coefficient might lead to a failure to reject a false null hypothesis, a type two error. The best predictor variables in regression are highly correlated with each result of dependent variable but they are least correlated with each other (Multiple linear regression used to analyse the corelation between GDP and some variables, 2015).
In addition to this, the theory of variable and fixed cost is based on the defined relations between volume and cost of production. The cost amount, however, might depends on the various factors than the production volume such as seasonal factors etc. Thus, it is being argued by researchers that if regression analysis is properly used, it might become one of an objective tool of economic management, it will also provide correct interpretation of results or outcome and provable close correlation...........
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