A Company Keeps Extensive Records on Its New Salespeople on the Premise

question 20

Essay

A company keeps extensive records on its new salespeople on the premise that sales should increase with experience. A random sample of seven new salespeople produced the data on experience and sales shown in the table. $\begin{array}{c|c}\text { Months on Job } & \begin{array}{c}\text { Monthly Sales } \\\text { (\$ thousands) }\end{array} \\\hline 2 & 2.4 \\4 & 7.0 \\8 & 11.3 \\12 & 15.0 \\1 & .8 \\5 & 3.7 \\9 & 12.0\end{array}$

Stumary statistics yield $S S _ { x x } = 94.8571 , S S _ { x y } = 124.7571 , S S _ { y y } = 176.5171 , \bar { x } = 5.8571$ , and $\bar { y } = 7.4571$ . Using $S S E = 12.435$ , find and interpret the coefficient of determination.

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Definitions:

ATC

Stands for Average Total Cost, which is the total cost per unit of output produced.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of the business activity.

AVC

Average Variable Cost is the total variable costs divided by the quantity of output, representing the variable cost per unit of output.

MC = MR

An economic principle stating that to maximize profits, firms should produce up to the point where marginal cost equals marginal revenue.