Which of These Equations Is a Linear Model

question 8

Multiple Choice

Which of these equations is a linear model?

• A)Y = b₀ + b₁ ln(X)where X = time
• B)Y = b₀ + b₁ X, where X = ln(time)
• C)Y = b₀ + b₁ X, where X = time²
• D)Y = b₀ + b₁ X, where X = time

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Definitions:

Mixed Cost

A cost composed of a fixed component and a variable component, changing in total with the level of activity but remaining constant on a per unit basis up to a certain production volume.

Variable Manufacturing Cost

The sum of all costs that vary with the level of manufacturing output, including direct materials, direct labor, and variable overhead.

Production Volume

The total quantity of goods or services produced by a company during a specific period.

Variable Manufacturing Cost

This includes costs that vary directly with the level of production output, such as raw materials and direct labor.