In Running the Simple Linear Regression of Y on X $\bar { X }$

question 44

Multiple Choice

In running the simple linear regression of Y on X, if you know that no observation in your sample has an X value that is equal to $\bar { X }$ , what condition might not be true?

• A) The regression line's prediction at \(\bar { X }\) is \(\bar { Y }\) .
• B) The sum of the residuals equals zero.
• C) The average of the residuals equals zero.
• D) The residual for the observation closest to \(\bar { X }\) will be zero.

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Definitions:

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume, such as sales commissions.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent.

Contribution Margin

The amount by which the sales price of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance.