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Question
What is an endogenous variable?
What is an endogenous variable?
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Solution
Endogenous Variable:
- A variable that is modified or defined by its relationship within the model to other variables.
- An endogenous variable is associated with a dependent variable
- The value of an endogenous variable is determined by the formula.
- Endogeneous variables are also called jointly determined.
For example, in a model studying supply and demand, the price of a good is an endogenous factor because the price can be changed by the producer (supplier) in response to consumer demand.
Hence, endogenous variable is explained.
Endogenous Variable:
- A variable that is modified or defined by its relationship within the model to other variables.
- An endogenous variable is associated with a dependent variable
- The value of an endogenous variable is determined by the formula.
- Endogeneous variables are also called jointly determined.
For example, in a model studying supply and demand, the price of a good is an endogenous factor because the price can be changed by the producer (supplier) in response to consumer demand.
Hence, endogenous variable is explained.
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