The Owners of an Online Shop Use a Multiple Regression

question 19

Multiple Choice

The owners of an online shop use a multiple regression model with three independent variables where ​ y = Shipping Cost ($) ​ x₁ = Product weight (kg) ​ x₂ = Number of items ​ x₃ = Total amount ($) ​ The regression model is ​ y = 8.50 + 12x₁ + 0.1x₂ + 0.05x₃ + 0.08x₂x₃ + e ​ Interpret the value of β₁ for this model. ​

• A) The average change in shipping costs associated with an increase in the number of items by 1 when the product weight and the total amount are held fixed.
• B) The average change in shipping costs associated with a 1-dollar increase in the total amount when the product weight and the number of items are held fixed.
• C) The difference between the slopes of regression lines depending on the total amount and the number of items.
• D) The average change in shipping costs associated with a 1-kg increase in product weight when the number of items and the total amount are held fixed.
• E) The average change in shipping costs when the perceived increase value of the number of items by 1 unit depends on the change of the total amount.

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Definitions:

Direct Financing Lease

A lease agreement where the lessor purchases the leased asset specifically for the lease and all financial risks and rewards are transferred to the lessee.

Periodic Rate of Return

The rate at which an investment grows during each accounting period, often utilized to compare the profitability or yield of different investments over a set time frame.

Net Investment

The total amount spent on purchasing fixed assets less any disposals, also considering adjustments for depreciation or impairments.

Unreimbursable Costs

Unreimbursable costs are expenses incurred by a party that cannot be recovered through billing or other forms of payment from clients or customers.