TABLE 13-01
a Large National Bank Charges Local Companies for Using

question 71

Multiple Choice

TABLE 13-01
A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) -- measured in dollars per month -- for services rendered to local companies. One independent variable used to predict service charge to a company is the company's sales revenue (X) -- measured in millions of dollars. Data for 21 companies who use the bank's services were used to fit the model:
E(Y) =?₀ + ?₁X
The results of the simple linear regression are provided below.

$\hat{Y}=-2,700+20 X, S_{Y X}=65$ , two-tailed $p$ value $=0.034\left(\right.$ for testing $\left.\beta_{1}\right)$

-Referring to Table 13-1, a 95% confidence interval for ?₁ is (15, 30) . Interpret the interval.

• A) At the ? = 0.05 level, there is no evidence of a linear relationship between service charge (Y) and sales revenue (X).
• B) We are 95% confident that the mean service charge will fall between $15 and $30 per month.
• C) We are 95% confident that average service charge (Y) will increase between $15 and $30 for every $1 million increase in sales revenue (X).
• D) We are 95% confident that the sales revenue (X) will increase between $15 and $30 million for every $1 increase in service charge (Y).

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Definitions:

Competitive Industry

An industry characterized by a large number of firms competing with each other to provide goods or services to consumers.

Market Demand

The total quantity of a product or service that consumers are willing and able to purchase at various prices during a specified time period.

Market Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.

Competitive Industry

A sector of the marketplace characterized by numerous firms vying for market share, leading to benefits for consumers through innovation and lower prices.