Application of the Least Squares Method Results in Values of the Y-Intercept

question 50

Multiple Choice

Application of the least squares method results in values of the y-intercept and the slope that minimizes the sum of the squared deviations between the _____.

• A) observed values of the independent variable and the predicted values of the independent variable
• B) actual values of the independent variable and the predicted values of the dependent variable
• C) observed values of the dependent variable and the predicted values of the dependent variable
• D) None of the answers is correct.

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Definitions:

Economic Profit

The variation between total income and total expenditures, encompassing both direct and indirect costs, within a business.

Competitive Market

A competitive market is one where there are many buyers and sellers, so no single participant has significant power to dictate the price of goods or services.

Long Run

A period of time in which all factors of production and costs are variable, allowing for full adjustment to changes.

Profit-Maximizing Firms

Businesses that operate with the primary goal of maximizing their profit, which is achieved by increasing income while minimizing costs.