Economics · Econometrics
Which of the following statements correctly describe the limitations of the Linear Probability Model (LPM)? A. Conditional probability of the event lies between 0 and 1 always. B. Error term is heteroscedastic. C. R2 is not a reliable measure of goodness of fit. D. Predicted probabilities can lie outside the interval [0,1]. Choose the correct answer:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1B and D only
- 2A, B and D only
- 3B, C and D only✓
- 4A and C only
Correct answer
B, C and D only
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