A Manufacturing Company Opened a Second Branch Plant in the Same

question 54

Multiple Choice

A manufacturing company opened a second branch plant in the same city where its first plant operates. Some of the employees had been assigned involuntarily to the new plant while some others volunteered to be transformed from the first plant to the new plant. The production manager of the new plant would like to find out whether employees who volunteered for the new plant and those who were involuntarily assigned to it differ with respect to productivity. From a random sample of 50 employees, the manager estimated the following multiple regression equation: $\hat{y}$ = -2400 + 140x₁ - 250x₂
Where y is the average number of units produced by an employee a day during the second month after joining the new plant, x₁ is the employee's aptitude test score, and x₂ is a dummy variable coded 1 for involuntary assignment and 0 for voluntary assignment.
For each additional aptitude test score, the average number of units produced by an employee who joined the new plant involuntarily:

• A) increases by 250.
• B) increases by 140.
• C) decreases by 140.
• D) decreases by 250.

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Definitions:

Industry Exit

The process by which a company ceases operations in a specific industry, typically due to financial losses, market competition, or changing industry conditions.

Long Run Adjustments

Changes or adaptations made by firms in response to long-term changes in market conditions, where all inputs and production capacities can be varied.

Constant-cost Industry

An industry where the costs of production, including inputs and technology, do not change as the total output of the industry changes.

Long-run Equilibrium

A state in which all aspects of an economy or market are balanced, and all adjustment processes have been completed over time.