Retail Price Data for N = 60 Hard Disk Drives $y =$

question 14

Multiple Choice

Retail price data for n = 60 hard disk drives were recently reported in a computer magazine. Three variables were recorded for each hard disk drive: $y =$ Retail PRICE (measured in dollars)
$x _ { 1 } =$ Microprocessor SPEED (measured in megahertz)
(Values in sample range from 10 to 40 )
$x _ { 2 } =$ CHIP size (measured in computer processing units)
(Values in sample range from 286 to 486 )
A first-order regression model was fit to the data. Part of the printout follows:





Identify and interpret the estimate for the SPEED $\beta$ -coefficient, $\hat { \beta } _ { 1 }$ .

• A) \(\hat { \beta } _ { 1 } = 3.57\); For every \(\$ 1\) increase in PRICE, we estimate SPPED to increase by about 4 megahertz, holding CHIP fixed.
• B) \(\hat { \beta } _ { 1 } = 3.57\); For every 1 -megahertz increase in SPEED, we estimate PRICE to increase \(\$ 3,57\), holding CHIP fixed.
• C) \(\hat { \beta } _ { 1 } = 105\); For every \(\$ 1\) increase in PRICE, we estimate SPEED to increase 105 megahertz, holding CHIP fixed.
• D) \(\hat { \beta } 1 = 105\); For every 1 -megahertz increase in SPEED, we estimate PRICE (y) to increase \(\$ 105\), holding CHIP fixed.

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent or salaries.

Variable Cost

Expenses that vary proportionally with the level of production or service output, such as materials or labor costs.

Capacity

The maximum amount of work or production an organization is capable of completing in a specified period.

Net Present Value

A financial metric that calculates the value of a series of cash flows by discounting them to present value using a specific rate, often used in capital budgeting.