The Following Simple Model Is Used to Determine the Annual

question 24

Multiple Choice

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = β₀ + ₀ Edu + β₁Inc + u
The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual.
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Refer to the model above. The benchmark group in this model is _____.

• A)the group of educated people
• B)the group of uneducated people
• C)the group of individuals with a high income
• D)the group of individuals with a low income

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.