TABLE 17-7 As a Project for His Business Statistics Class,a Student Examined

question 274

Multiple Choice

TABLE 17-7
As a project for his business statistics class,a student examined the factors that determined parking meter rates throughout the campus area.Data were collected for the price per hour of parking,blocks to the quadrangle,and one of the three jurisdictions: on campus,in downtown and off campus,or outside of downtown and off campus.The population regression model hypothesized is
Y_i = α + β₁X_1i + β₂X_2i + β₃X_3i + ε
where
Y is the meter price
X₁ is the number of blocks to the quad
X₂ is a dummy variable that takes the value 1 if the meter is located in downtown and off campus and the value 0 otherwise
X₃ is a dummy variable that takes the value 1 if the meter is located outside of downtown and off campus,and the value 0 otherwise
The following Excel results are obtained.
-Referring to Table 17-7,what is the correct interpretation for the estimated coefficient for X₂?

• A)Holding the effect of the other independent variables constant,the estimated mean difference in costs between parking on campus,and parking outside of downtown and off campus is -$0.24 per hour.
• B)Holding the effect of the other independent variables constant,the estimated mean difference in costs between parking in downtown and off campus,and parking on campus is -$0.24 per hour.
• C)Holding the effect of the other independent variables constant,the estimated mean difference in costs between parking in downtown and off campus,and parking outside of downtown and off campus is -$0.24 per hour.
• D)Holding the effect of the other independent variables constant,the estimated mean difference in costs between parking in downtown and off campus,and parking either outside of downtown and off campus or on campus is -$0.24 per hour.

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Definitions:

Regulated Natural Monopolies

Companies that operate in a market with no competition due to high infrastructure costs, but their prices and services are regulated by the government to protect consumers.

Public Utilities

Companies that provide essential services such as water, electricity, and telecommunications to the public, usually subject to government regulation.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of operations and output increases.

Making a Profit

The financial gain obtained when the revenue generated from a business activity exceeds the expenses, taxes, and costs associated with maintaining the operation.