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Q.2. We have access to the following data on power-producing firms: Var No Variable Name Comments Order Observation number (1-245). Costs Cost in millions of
Q.2. We have access to the following data on power-producing firms: Var No Variable Name Comments Order Observation number (1-245). Costs Cost in millions of dollars KWH Output in billions of kilowatt hours aUAWNA PL Price of labor PF Price of fuel PK Price of capital Suppose the "true" cost model is: In C* = Bot Bylny + B1Inpi + 32lnp2 + error where, In C* = InC - Inp3 In pi = Inp1 - Inp3 In p? = Inp2 - Inp3 In stands for natural log, C is the cost P1, P2, p3 are the three input prices, and y is the output. . If you used Ordinary Least Squares to estimate the cost model In C"* = Bo + By Iny + B1 Inpi + error, will your estimates of the coefficients be biased on unbiased? Explain in words
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