Suppose You Have Two Departments and Have Daily Data on Complaints

Multiple Choice

Suppose you have two departments and have daily data on complaints and number of products they oversee for the departments over two years. In the second year, you increased the number of products under the scope of department #2 by 10. To estimate the effect of this increase in the number of products, you estimate the following regression: Complaints_it = α + β₁ × Department #2_it + β₂ × Year2_it + β₃ × Department #2_it × Year2_it + U_it. Which coefficient controls for non-time varying effects that make department #1 have more complaints than department #2?

A) β₁
B) β₂
C) α + β₃
D) β₃