Ethio Econ discussion group

@Orocivitasshadowman Gadisa, We really appreciated your feed back. Thank you!

10Q

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Dear Gadisa, This questions has been a challenge for many of us. I have even tried consulting an Econometrics instructor. Yet,*there seems to be a little gap between what the question intendes to ask and what it is actually asking. I believe the "Assumption" that the question is referring to is the basic assumption of linear regression which says that a model should be linear in parameters. But Gadisa, as you said a model can also be linear in variables. But that is not an assumption of linear regression. (It is not necessary) Please check the following book on the meaning of linearity. Domar Gujarati, Basic Econometrics 5th edition page 38 (Book is available on our bot)

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Garru gaffi qormata maf nu gadi dhifne

Dear Gadisa, Rightward shift of LRAS is caused by improved productivity. LRAS curve actually represents the potential output that an economy can produce. Improved productivity does not result from decreasing tax. Possible reasons for increased productivity could be an increase in population, improved technology, reduced unemployment.

thank you

Dear Betelhem, Thank you very much for the valuable feedback. We are looking into the question and will post an update very soon.

It cant be A. The upper part of a kinked demand curve is more price elastic than the lower part that's why firms lose customers when price increase (because other firms don't follow the increase in price, the one that increased price will face a decline in sales alone since people prefer the lower prices set by the others). In the lower part its more steeper because firms follow them thus it cant boost its sales just because its price is lowered. (i.e. low price elasticity )

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Its explain domestic

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