Refer to the Following Nonlinear Model Which Relates W to P

question 50

Multiple Choice

Refer to the following nonlinear model which relates W to P, Q, and R:
$W = a P ^ { b } Q ^ { c } R ^ { d }$
The computer output form the regression analysis is:
$$\begin{array} { r l l l l l } \text { DEPENDENTVARIAELE: } & \text { LNW } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OESERVATIONS: } & \text { 19 } & \mathbf { 0 . 9 0 2 3 } & 43.12 & \mathbf { 0 . 0 0 0 1 } & \\\\& \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & \text { ESTMMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & \mathbf { 2 . 5 0 } & \mathbf { 0 . 4 5 } & \mathbf { 5 . 5 6 } & \mathbf { 0 . 0 0 0 1 } \\\text { LNP } & - 5.10 & 1.75 & - \mathbf { 2 . 9 1 } & \mathbf { 0 . 0 1 1 3 } \\\text { LNQ } & 12.4 & \mathbf { 3 . 2 } & \mathbf { 3 . 8 3 } & \mathbf { 0 . 0 0 1 7 } \\\text { LNR } & \mathbf { - 6 . 0 0 } & 1.5 & - 400 & \mathbf { 0 . 0 0 1 0 }\end{array}$$
-The value of R² tells us that

• A) 0.9023% of the total variation in ln W is explained by the regression equation.
• B) 90.23% of the total variation in ln W is explained by the regression equation.
• C) 0.9023% of the total variation in P, W, and R is explained by the regression equation.
• D) 0.9023% of the total variation in ln P, ln Q, and ln R is explained by the regression equation.

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security representing an ownership interest in a corporation.

Sale Date

The specific date on which a sale transaction is recognized in the accounting records, marking when the ownership and risks of goods pass from the seller to the buyer.

Equity Method

An accounting technique used to record investments in associate companies, where the investment is initially recognized at cost and subsequently adjusted for the investor’s share of the investee’s profit or loss.

Investment Account

A financial account held at a brokerage or financial institution that contains securities, cash, and other holdings for investment purposes.