Multiple Choice
Suppose the relationship between temperature and demand for electricity is non-linear, due to the high demand for electricity when it is both very cold and very hot outside. What is the risk of estimating the effect of price on demand for electricity by the regression equation: Electricity Consumptiont = α0 + α1Pricet + α2Temperaturet + Ut?
A) The estimate of α1 will be biased.
B) The sample will not be representative.
C) Electricity consumption will be censored from above.
D) None of the answers is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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