TABLE 14-5
a Microeconomist Wants to Determine How

question 58

Multiple Choice

TABLE 14-5
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.
$$\begin{array}{l}\text { Regression Statistics }\\\begin{array} { l r } \hline \text { Multiple R } & 0.830 \\\text { R Square } & 0.689 \\\text { Adjusted R Square } & 0.662 \\\text { Standard Error } & 17501.643 \\\text { Observations } & 26\end{array}\end{array}$$

ANOVA
$\begin{array}{lcrrrr}\hline & \text { d f }&\text { S S } & \text { M S } & \text { F }&\text { Significance F } \\\hline \text {Regression} & 2 & 15579777040 & 7789888520 & 25.432 & 0.0001 \\\text {Residual }& 23 & 7045072780 & 306307512 & & \\\text {Total }& 25 & 22624849820 & & & \\\hline\end{array}$

$$\begin{array} { l c c c c } & \text { Coefficients } & \text { Standard Error} & \text { t Stat } & \text { p-value } \\\text { Intercept } & 15800.0000 & 6038.2999 & 2.617 & 0.0154 \\\text { C apital } & 0.1245 & 0.2045 & 0.609 & 0.5485 \\\text { W ages } & 7.0762 & 1.4729 & 4.804 & 0.0001 \\\hline\end{array}$$

-Referring to Table 14-5, one company in the sample had sales of $20 billion (Sales = 20,000) . This company spent $300 million on capital and $700 million on wages. What is the residual (in millions of dollars) for this data point?

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Definitions:

Labor Supply Curve

This represents the relationship between the amount of labor that workers are willing to offer and the wage rate, typically showing that higher wages incentivize more labor supply.

Inclusive Unionism

The policy, pursued by industrial unions, in which a union attempts to include every worker in a given industry so as to be able to restrict the entire industry’s labor supply and thereby raise wages. Compare with exclusive unionism.

Industrial Unions

Labor unions that organize workers across a wide range of occupations within a single industry.

Monopsonist

A monopsonist is a market condition where there is only one buyer facing many sellers, allowing the buyer to exert significant control over prices.