11.1 The Nature of Heteroscedasticity Homoscedasticity: equal variance. Heteroscedasticity: unequal variance. Heteroscedasticity is usually found in cross-sectional data

One CLRM assumption is: The model used in empirical analysis is \correctly specified\

Dummy variables (also indicator variables; binary variables categorical variables; dichotomous variables.) Qualitative variables in regression model For example: sex, race, color, religion, nationalit y, marital status, etc

The Object of Hypothesis Testing To answer- How \good\ is the estimated regression line. How can we be sure that the estimated regression function (i.e., the SRF) is in fact a good estimator of the true PRF?

5.1 The Meaning of Regression Analysis 1.Regression analysisthe study of the relationship between one variable Y (the explained, or dependent variable) and one or more other variables X/Xs (explanatory, or independent variables)

2.1 SOME NOTATION 1. The Summation Notation X, =X1++...+n can be abbreviated as:Σx,orΣx 2. Properties of the Summation Operator

Consumer Preferences Budget Constraints Consumer Choice Revealed Preferences

Supply and Demand The Market Mechanism Changes in Market Equilibrium Elasticities of Supply and Demand Short-Run Versus Long-Run Elasticities

Quality Uncertainty and the Market for Lemons Market Signaling Moral Hazard The Principal-Agent Problem

General Equilibrium Analysis Efficiency in Exchange Equity and Efficiency Efficiency in Production