Brewsky's Is a Chain of Micro-Breweries -
What Is the Percent of the Total Variance That

question 8

Multiple Choice

Brewsky's is a chain of micro-breweries. Managers are interested in the costs of the stores and believe that the costs can be explained in large part by the number of customers patronizing the stores. Monthly data regarding customer visits and costs for the preceding year for one of the stores have been entered into the regression analysis and the analysis is as follows:
$\begin{array}{llr} \text { Average monthly customer visits } &&1,462\\ \text { Average monthly total costs } &&\$4,629\\& \text { Regression Results} &\\ \text { Intercept } &&\$1,496\\ \text { b coefficient } &&\$2.08\\ \text { R }^{2} &&0.86814\\\end{array}$

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What is the percent of the total variance that can be explained by the regression equation? (CMA adapted)

• A) 86.8%
• B) 31.6%
• C) 97.7%
• D) 71.9%

Describe the relationship between marginal cost, average total cost, and average variable cost.

Understand the impact of changes in fixed costs on average fixed costs and total costs.

Interpret production and cost diagrams to identify cost components and their implications on production decisions.

Relate the concepts of marginal product and marginal cost to the efficiency of production inputs.

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Definitions:

Contract

An agreement between two or more parties that is recognized and enforceable by legal systems.

Liability

Refers to the state of being legally responsible for something, typically in the context of debts or legal wrongs.

Express Permission

Explicit authorization or consent given by a party to another to perform an action or use property or information.

Lakeside Property

Real estate located adjacent to or near a lake, often valued for its picturesque views and recreational opportunities.