Angela Chou Has Been Asked to Investigate the Determinants of Poverty

question 2

Multiple Choice

Angela Chou has been asked to investigate the determinants of poverty in Ontario communities.
She collected data on 60 communities from Statistics Canada. She selected the percentage of poor
Persons living under the poverty line [Poor (%) ], measured by Low Income Cut-Off, designed by
Statistics Canada as a measure of poverty for a community, as the dependent variable. The
Independent variables selected are percent of single families in each community, the
Unemployment rate in each community, percent of population in the community holding a bachelor's
Degree as their highest level of education attained, and percent of population holding a High
School Diploma as their highest level of education attained.
Given the regression equation Poor (%) = -3.81 + 0.798 Single-Families (%) + 0.624 Unemployment
Rate (%) - 0.170 Bachelor's Degree (%) - 0.003 High School (%) .-
What is the estimated percentage of poor persons living below the poverty line in a community with
5% of the community as single-families, a 5% unemployment rate, only 5% holding a Bachelor's
Degree and 25% having High School as their highest attained educational level?

• A) 2.375
• B) -2.375
• C) 11.845
• D) -11.845

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Definitions:

Overapplied Overhead

A situation where the overhead costs allocated for products or services exceed the actual overhead costs incurred.

Manufacturing Overhead

Refers to all manufacturing costs excluding the direct costs of labor and materials, such as rent, utilities, and equipment depreciation.

Direct Labor-Hours

The total time worked by employees who are directly involved in the manufacturing process of a product.

Predetermined Overhead Rate

A rate used to allocate estimated overhead costs to products or services, based on a preselected activity base.