Question

3. The scrap rate for a manufacturing firm is the number of defective items-products that must be discarded -out of every 100 produced. Thus, for a given number of items produced, a decrease in the scrap rate reflects higher worker productivity. Suppose we are interested in one hand about the efficiency of worker training on productivity and on the other hand whether firm size, mea- sured in terms of the number of employees, has an effect on productiv- it In order to investigate these matters, we specify the model as (1) log(scrap) Bo+Bhrsemp+ B2 log(sales)+Bs log(employ)+u, where scrap is the scrap rate, hrsemp is annual hours of training per employee, sales is annual firm sales (in euros), and employ is the number of firm employees An econometrician, however, suggested that in order to investigate also the effect of the firm size on the scrap rate the model should be specified as log(scrap-βο+8hrsemp+82 log(sales/employ)+dg log(employee)+u.
Can I please get an answer to this problem?

Answer 1

tlogLemployee e m rhich desns contnbutioneach emploe i sale ther mear- sorap rat ar les fiha p ducks which ar non defeetive ax produced. rathe salesanalu doeont take- into eeゃ况 R C C ou n f n(elotive producti vit7 Null tert Chypothes) )