An Example of the Interaction Term Between Two Independent, Continuous

question 51

Short Answer

An example of the interaction term between two independent, continuous variables is a. $\quad Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { i } + \beta _ { 2 } D _ { i } + \beta _ { 3 } \left( X _ { i } \times D _ { i } \right) + u _ { i }$ .
b. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { 1 i } + \beta _ { 2 } X _ { 2 i } + u _ { i }$ .
c. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } D _ { 1 i } + \beta _ { 2 } D _ { 2 i } + \beta _ { 3 } \left( D _ { 1 i } \times D _ { 2 i } \right) + u _ { i }$ .
d. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { 1 i } + \beta _ { 2 } X _ { 2 i } + \beta _ { 3 } \left( X _ { 1 i } \times X _ { 2 i } \right) + u _ { i }$ .

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Definitions:

Allocation Base

A criterion or measure used for distributing overhead costs among various cost objects, such as departments or products.

Fixed

Expenses that do not change in total over a short period, regardless of the level of production or sales activity, such as rent, salaries, or insurance.

Classified

Pertains to information, documents, or materials that have been deemed confidential and are restricted to certain levels of access.

Merchandising Company

A type of business that purchases finished goods and sells them to consumers without changing their form.