When having a choice of which estimator to use with a binary dependent variable, use
A) probit or logit depending on which method is easiest to use in the software package at hand.
B) probit for extreme values of X and the linear probability model for values in between.
C) OLS (linear probability model) since it is easier to interpret.
D) the estimation method which results in estimates closest to your prior expectations.
Answer: A
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Which of the following is not an advantage to a country of choosing to fix its exchange rate against a major currency, rather than choosing a floating exchange rate?
A) Pegging reduces the uncertainty caused by currency fluctuations and thereby simplifies business planning. B) Pegging allows the country more flexibility in conducting monetary policy. C) Pegging insures that interest payments stemming from foreign loans do not fluctuate with the value of the currency. D) Pegging helps avoid inflation in imported goods caused by currency depreciation for countries with significant levels of imports.
How does a manufacturer set his or her total output to maximize profit?
(A) Set production so that total revenue plus costs is greatest. (B) Determine the largest gap between total revenue and total cost. (C) Determine where marginal revenue and profit are the same. (D) Set production at the point where marginal revenue is smallest.