Which of the following are hypothetical outcomes which we do

Which of the following are hypothetical outcomes which we don\'t actually observe? O E?li ID1-1) and E(y1f IDi-O) E Oi Di-0 and Ely1i Di-1)

Solution

the hypothetical outcomes which cannot be actually observed would be when Di=0 in both cases for yo and y1 then all predictors are zero except if an explanatory variable is given. Also, if an intercept exists it has no economic significance and cannot be actually observed so we can drop this outcome.

the correct option is (b)