Suppose You've Run a Regression Relating Log(Output) to Log(Worker Hours)

question 13

Multiple Choice

Suppose you've run a regression relating log(Output) to log(Worker Hours) in Excel. You are willing to make the necessary assumptions to deduce causality and run hypothesis tests. Your results are as follows: $$\begin{array} { l c c c c } & \text { Coefficients } & \text { Standard Error } & t \text { Stat } & P \text {-value } \\\hline \text { Irtercept } & 17.4583044 & 28.47075584 & 0.613201297 & 0.541240031 \\\text { Log(Worker Hours) } & 2.699483287 & 0.711729096 & 3.792852225 & 0.000264681\end{array}$$ How should you interpret the coefficient on Log(Worker Hours) of 2.69?

• A) A 1% increase in Worker Hours leads to a 2.69% increase in Output.
• B) A 1 unit increase in Worker Hours leads to a 2.69% increase in Output.
• C) A 1% increase in Worker Hours leads to a .0269% increase in Output.
• D) A 2.69% increase in Worker Hours leads to a 1% increase in Output.

Understand the graphical representation of various cost behaviors such as fixed, variable, and mixed costs.

Determine appropriate activity bases for specific costs.

Differentiate between fixed, variable, and mixed costs in practical scenarios.

Understand and apply the concept of the relevant range in management decisions.

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