What indicators should we take into consideration when talking about levels of Living and Productivity in Economics Development?
When we talk about the levels of living we should consider some basic indicators, such as the health as measured by life expectancy, the real income per capita, the child mortality and the education. In other words, it deals basically with The Human Development Index (HDI). The Human Development Index (HDI) is used to calculate the quality of life in countries worldwide. The HDI is a composite of several indicators, which measure a country's achievements in three main areas of human development: longevity, education, and economic standard of living.
what is meant by the coefficient of determination R2, autocorrelation and how to solve this problem?
the coefficient of determination R2 explains how much of the variation in the dependent variable is attributable to the explanatory variables. The R squared really answers the question, “of all of the reasons why the outcome variable can vary, what percent of those reasons can be accounted for by the independent variables. Autocorrelation of the errors violates the ordinary least squares (OLS) assumption that the error terms are uncorrelated, meaning that the Gauss Markov theorem does not apply and that OLS estimators are no longer the Best Linear Unbiased Estimators (BLUE). The problems created by autocorrelation are that the least squares estimators are linear and unbiased but they are not efficient, or the formulas used to compute the least squares standard errors are no longer correct. In order to solve this problem, we are going to estimate the equation once again by adding AR(1).
What is an optimum firm, the optimal rate of output and optimal scale of plant and how do they operate in the short run?
An optimum firm is that firm which fully utilizes its scale of operation and produces the optimum amount of output with the minimum cost possible. In the short run, a firm would build the scale of plant and operate it at a point where the AC is at its minimum. Thus, if the demand for the product increase, it cannot change the number of factors of production in the short run, so ATC begins to increase due to diseconomies of scale.