Essay
Suppose you decide to build a model to explain why some companies earned more profits in the past year than others did.
(A)What data would you collect?
(B)What variable do you believe would supply the major part of the explanation of the variation in profits?
(C)If you graph the data with profits on the vertical axis and your explanatory variable on the horizontal axis,will the relationship be upward sloping or downward sloping?
(D)What does your answer in part (C)imply for whether the data on profits and the data on your explanatory variable are positively or negatively correlated?
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(A) I would collect data on company prof...View Answer
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