In the case of errors-in-variables bias, the precise size and direction of the bias depend on
A) the sample size in general.
B) the correlation between the measured variable and the measurement error.
C) the size of the regression R2.
D) whether the good in question is price elastic.
Answer: B
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The order of the letters along the rows of computer keyboards could be changed to allow users to type faster, but this would inconvenience the vast majority of people who learned to type with the current keyboard layout
The costs of switching to a new layout make this change unlikely. This is an example of A) how consumers sometimes do not behave rationally. B) how the elasticity of demand for typewriters has been affected by externalities. C) path dependency. D) how social influences overwhelm the substitution effect of a price change.