TABLE 15-3
a Certain Type of Rare Gem Serves as a Status

question 38

Multiple Choice

TABLE 15-3
A certain type of rare gem serves as a status symbol for many of its owners. In theory, for low prices, the demand increases and it decreases as the price of the gem increases. However, experts hypothesize that when the gem is valued at very high prices, the demand increases with price due to the status owners believe they gain in obtaining the gem. Thus, the model proposed to best explain the demand for the gem by its price is the quadratic model:
$Y=\beta_{0}+\beta_{1} X+\beta_{2} X^{2}+\varepsilon$
where Y = demand (in thousands) and X = retail price per carat.
This model was fit to data collected for a sample of 12 rare gems of this type. A portion of the computer analysis obtained from Microsoft Excel is shown below:
SUMMARY OUTPUT
$\begin{array}{lc} \text {Regression Statistics}\\\hline \text { Multiple R } & 0.994 \\\text { R Square } & 0.988 \\\text { Standard Error } & 12.42 \\\text { Observations } & 12 \\\hline\end{array}$


$\begin{array}{l}\text { ANOVA }\\\begin{array}{lrrrrr}\hline & d f & S S & \text { MS } & F & \text { Sgnificance } \\\hline \text { Regression } & 2 & 115145 & 57573 & 373 & 0.0001 \\\text { Residual } & 9 & 1388 & 154 & & \\\text { Total } & 11 & 116533 & & & \\\hline\end{array}\end{array}$


$\begin{array}{lrccc} & \text { Coeff } & \text { Std Error } & t \text { Stad } & p \text {-value } \\\hline \text { Intercept } & 286.42 & 9.66 & 29.64 & 0.0001 \\\text { Price } & -0.31 & 0.06 & -5.14 & 0.0006 \\\text { Price Sq } & 0.000067 & 0.00007 & 0.95 & 0.3647 \\\hline\end{array}$

-Referring to Table 15-3, what is the correct interpretation of the coefficient of multiple determination?

• A) 98.8% of the total variation in demand can be explained by the addition of the square term in price.
• B) 98.8% of the total variation in demand can be explained by just the square term in price.
• C) 98.8% of the total variation in demand can be explained by the quadratic relationship between demand and price.
• D) 98.8% of the total variation in demand can be explained by the linear relationship between demand and price.

Identify the structure and components necessary for a valid syllogism.

Analyze enthymemes by identifying unstated premises or conclusions based on given information.

Understand the concept of "goodness of fit" concerning child development and temperament.

Recognize the primary factors and individuals responsible for child maltreatment.

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Definitions:

Note Receivable

An asset on the balance sheet representing money owed to the holder by a debtor, which includes an obligation to pay both the principal and interest.

Dishonoured

Refers to a financial instrument, such as a check or a bill, that is not paid upon presentation for settlement.

Maturity Value

The amount that will be received at the maturity date of an investment, including the principal and any accrued interest.

Note Receivable

A written promise that one party will pay another party a specified sum of money, either on demand or at a set future date.