Suppose Your Lead Analyst Runs a Simple Regression of Profits

question 28

Multiple Choice

Suppose your lead analyst runs a simple regression of Profits (Y) on price (X) . You know that the average profit in the sample was $1,000 and the average price was $25. If your analyst reports that the intercept from the simple regression is 900, what can you infer about the estimated slope?

• A) The estimated slope is 4.
• B) The estimated slope is -4.
• C) The estimated slope is 2.
• D) None of these choices are correct.

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Definitions:

Personal Liability

The legal obligation of an individual to bear the cost of damages or losses themselves, rather than the liability being absorbed by an entity or insurance.

Agency Relationship

A fiduciary relationship in which one party (the agent) agrees to act on behalf of another party (the principal).

Ratify

To formally approve or confirm, often used in the context of treaties, agreements, or legislation.

Commission

A fee paid to an agent or employee for completing a task or making a sale, which is often a percentage of the sale's total value.