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I need to submit a substantive, quality follow-up responses to my classmates' initial answers.
I need to submit a substantive, quality follow-up responses to my classmates' initial answers. I will provide the original Question (there will be 2) as a reference to you provided by the Professor labeled "OQ1 and OQ2" then I will provide the initial answers from my Classmates labeled "C1, C2 and C3" these are the questions I need a substantive, quality follow-up for. The response should be 6 or more sentences or 2 paragraphs and please provide a reference.
OQ1: How can sample data support or inform economic decision making within an organization? Can the sample data have errors or be problematic when making decisions? Provide an example.
C1: Sample data can be used to inform and evaluate alternatives during decision making. For example, if a leadership from a gas station company needed to decide what location to build their gas station. The company has or can get all the information it needs to be reasonably certain how a given location will perform. Variables such as local demographics, traffic patterns, real estate availability and cost, and locations of competition must all be considered. Additionally, other variables such as traffic and the number of drivers near the location can help predict cash flow models to accurately predict how the proposed location will perform.
However, if the gas station company has much less sample data about outcomes, predicting them using market research and statistical analysis would be difficult. If sample data is not accurately represented or has errors, the prior listed variables would produce or predict an inaccurate decision. If the decisions become too problematic, the gas station company’s leadership may look at outcomes from their own or other gas stations in similar markets in regards to development or expansions.
C2: When an organization is in a decision making status, the sample data can come in handy as it allows for different options to be available to be weighted out. Organizations should always have multiple options outlined just in case something was to go wrong or more improvements needed to be made. Sample data does occur errors that could overall discourage the decision making process. Sample data can assist in understanding why different outcomes occur as well. By having back up information prepared proves to show that the sample data is their to support when in the decision making phase. An example, would be when I had to get my tb shot. When I first took the test, it said that I had gotten tb and Ive taken the test many times and never got tb. I was in shock and worried, so I took the test again. I actually passed the tb test the second time. I think it may have been a glitch in the system at the time. Anyways, I was worried that their was an issue and I had tb when it really was just an error.
C3: Sample data can support or inform economic decision making within an organization. The sample data can take into account the area, population, demographics, etc., rather than looking at straight numbers. When looking at sample data, it really depends what the organization is trying to accomplish. For example, I will be starting to gather information to look up locations to open up my own fashion boutique. Is there a one better city to open up shop? I’m willing to open up anywhere, so location isn’t an issue for me. I can take into account other cities populations, demographics, cost of living, and income to make an informed decision for my future. If there are no errors in the data, then I should be able to make a profit if no unforeseen circumstances arise. If there are errors, this could be problematic for my future business to stay afloat.
OQ2: How does applying econometrics to economics validate economic decisions for an organization? Support your response with an example.
C1: Econometrics is a crucial tool for economists since it is applied in diverse areas to shed light on theoretical questions. There are many ways in which the econometrics can be of benefit to the organization. Firstly, it helps in forecasting macroeconomic indicators. That is because some economists are more concerned with the expected impacts of monetary and fiscal policy on the aggregate performance of the firm (Froeb, McCann, Shor & Ward, 2010). Secondly, econometrics helps in estimating the impact of immigration on essential work and also in the identification of the factors that affect entry and exit into the market. That will give the business a real bearing to determine the stability and profitability of the industry the y are trading in. Additionally, Econometrics provides insight on the determination of minimum wage laws on employment levels. The minimum wage is an example of the price floor, so higher minimum wages are supposed to create a surplus of labor (higher levels of unemployment). However, the impact of price floors like the minimum wage depends on the shapes of the demand and supply curves. Econometrics is also applied in estimating the expected revenue in response to marketing campaign made by the organization.
C2: To put it plainly, econometrics applies statistics to quantify economic theories. According to Ouilaris (2012), econometrics “turns theoretical economic models into useful tools for economic policy making” through the use of “economic theory, mathematics, and statistical inference” (para. 3). Ouilaris (2012) continues to say, “The objective of econometrics is to convert qualitative statements into quantitative statements” (para. 3). Being able to quantify economic theories helps people and organizations predict the impact that certain economic decisions will have based on economic analysis.
An example of this would be a company using econometrics to determine the release of a new product. They could apply econometrics to determine at what price point they should release the product, at what time they should release the product, and what type of marketing campaign to use to maximize their profits. All of this could be determined by looking at consumer buying trends based on numerous variables, past sales, competitor’s sales/products, etc.
C3: Econometrics uses economic theory, mathematics, and statistical inference to quantify economic phenomena” and “in other words, it turns theoretical economic models into useful tools for economic policymaking” (Ouliaris, 2012, para. 3). More specifically, econometrics uses statistical techniques to understand economic issues and test theories. Applying econometrics to economics validates economic decisions because without evidence, economic theories are abstract and might have no influence on reality. Econometrics is a set of tools used to challenge theory with reality-based data.
For example, multiple linear regression models are used as a predictive analysis. This econometric can be used to explain the relationship between one continuous dependent variable from two or more independent variables. An example of how the multiple linear regression model could be used is to explain how weight and height explain the variance accounted for in BMI scores?
