Question $2$

$4$ pts

During an interview for a chief executive officer position, Fatma's potential employers ask her, $"$If you get this job, will you focu's more on industry effects or firm effects?" What should her answer be$?$

"Neither. I would focus on business cycle effects. These are the most predictable, so they are worth the most effort."

"Firm effects. I will be able to have the most impact on those."

"Neither. I would focus on unexplained variances. They are the most mysterious effects and the most powerful."

"Industry effects. They have the most substantial effect on superior firm performance."