A Regression Model Between Sales (Y in $1000), Unit Price

question 62

Multiple Choice

A regression model between sales (y in $1000) , unit price (x₁ in dollars) , and television advertisement (x₂ in dollars) resulted in the following function: ​ = 8 - 4x₁ + 5x₂
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For this model, SSR = 3500, SSE = 1500, and the sample size is 20.The coefficient of the unit price indicates that if the unit price is

• A) increased by $1 (holding advertisement constant), sales are expected to increase by $4.
• B) decreased by $1 (holding advertisement constant), sales are expected to decrease by $4.
• C) increased by $1 (holding advertisement constant), sales are expected to increase by $4000.
• D) increased by $1 (holding advertisement constant), sales are expected to decrease by $4000.

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Definitions:

Administrative Costs

Overhead expenses associated with the day-to-day running of a business, involving clerical activities, and support services not linked directly to production.

Service Department Expenses

Costs incurred by the departments that support the primary activities of a business but do not directly engage in production.

Operating Departments

Operating departments refer to the divisions within a company directly involved in its core business activities and operations.

Maintenance Expenses

Costs incurred to keep property, equipment, or assets in efficient operating condition, not improving but merely maintaining them.