A Regression Analysis Between Sales (In $1,000) and Advertising (In $\hat { y } = 80 + 5 x$

question 111

Multiple Choice

A regression analysis between sales (in $1,000) and advertising (in $1,000) resulted in the following least squares line: $\hat { y } = 80 + 5 x$ . This implies that:

• A)as advertising increases by $1,000, sales increases by $5,000.
• B)as advertising increases by $1,000, sales increases by $80,000.
• C)as advertising increases by $5, sales increases by $80.
• D)None of these choices.

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Definitions:

Total Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Area Under

Refers to the space beneath the curve of a graph in mathematics and statistics, often used to calculate integrals.

Average Cost

The total cost of production divided by the total quantity produced, indicating the cost per unit of output.

Marginal Costs

The additional cost incurred by producing one more unit of a good or service.