An Interaction Term in a Multiple Regression Model May Be

question 267

Multiple Choice

An interaction term in a multiple regression model may be used when

• A)the coefficient of determination is small.
• B)there is a curvilinear relationship between the dependent and independent variables.
• C)neither one of 2 independent variables contribute significantly to the regression model.
• D)the relationship between X1 and Y changes for differing values of X2.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.

Wage Rate

The amount of money paid to an employee per unit of time for labor or services rendered.

Monopolist

A monopolist is a single seller in a market who has significant control over the price and supply of a product or service.

Competitive Labor Market

A market where numerous buyers (employers) and sellers (workers) meet, with the price of labor (wages) determined by the supply of and demand for labor.