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marriottschool.netempPJBManEc300Econometrics.ppt

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					Econometrics:
 The empirical branch of economics which utilizes
 math and statistics tools to test hypotheses.
 Special courses are taught in econometrics, which
 present in detail the manner in which hypotheses
 are developed and tested.
 Some texts in Managerial Economics explore
 basic econometrics techniques to show how the
 firm could estimate its demand curve. Rather than
 take time to do this, we look merely at the
 intuition.
Regression Analysis:
 Quantitatively measures relationships between
 two (or more) variables.

                 Scatter Diagram
           C
                             •• • •
                              • • •
                     • • • •• • •
                  •    • •• • •
                 • • • ••
          C58
                • ••

            0                         I
                        I179
Econometrics:
 We use econometrics to determine a and b, to get
 a regression equation, i.e., to estimate a curve that
 best represents scatter diagram data, and to show
 how well it represents the data.
  C
                    •• • •
                     • • •
            • • • •• • •           R2, the “coefficient
         •    • •• • •             of determination,”
        • • • ••
       • ••                        does this.
          Line of “best fit”
  0                            I
Econometrics:
 R2 indicates the percentage of variance in the
 dependent variable that can be accounted for by
 variations in the independent variable.

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                         •      • • ••
                   • •• • • • • •
                              •
                                 •
                     • •• • •          •
                        • •       ••
                   •        •
Econometrics:


                            y=a+bx
                        •

            (x,y)       •
                •            Regression calculates
        •           •
   v{        }v              y=a+bx such that 3v2 is a
            •
    •                        minimum. No other line
                             has 3v2 as low.

				
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posted:7/25/2013
language:English
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