The Following Linear Trend Equation Was Developed for Annual Sales

question 21

Multiple Choice

The following linear trend equation was developed for annual sales from 1995 to 2001 with 1995 the base or zero year. ŷ = 500 + 60t ($000) . What are the estimated sales for 2005 ($000) ?

• A) $500
• B) $560
• C) $600
• D) $1,040
• E) $1,100

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Definitions:

Rate-Of-Return Regulation

Maximum price allowed by a regulatory agency is based on the (expected) rate of return that a firm will earn.

Economic Efficiency

A state where resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Monopolist

An individual or entity that has the exclusive control or possession of the supply or trade in a commodity or service, allowing them to manipulate the market.

Selling Price

Selling price is the amount of money that a seller is willing to accept in exchange for a good or service it provides to buyers.