Golf Handicaps Are Used to Allow Players of Differing Abilities

question 70

Multiple Choice

Golf handicaps are used to allow players of differing abilities to play against one another in a fair match. Recently a sample of golfers was selected in an effort to develop a model for explaining the difference in handicaps. One independent variable of interest is the number of rounds played per year. Another is whether or not the player is using an "original" name brand club or a copy. In recent years, a number of smaller golf club manufacturers have attempted to copy major golf club designs and sell "copies" of original clubs such as the Big Bertha by Calloway. To incorporate the type of club used, which of the following methods could be used?

• A) Create a dummy variable called "Club Used" and code it "O" for original and "C" for copy.
• B) Create a dummy variable called "Club Used" and code it 1 for copy and 0 for original.
• C) Create a dummy variable called Club Used" and code it 1 for original and 0 for copy.
• D) Either B or C would work.

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Definitions:

Mixed Costs

Expenses that have both a fixed and variable component, changing in total with the level of activity but also including a constant element.

Fixed Costs

Fixed costs are expenses that remain constant for a company regardless of how much it produces or sells, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that fluctuate in direct proportion to the amount of production or sales figures.