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.
​
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

---

Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects cash from its credit sales by dividing net credit sales by the average accounts receivable.

Allowance For Bad Debts

An estimate of the amount of credit sales that are expected not to be collected, which is subtracted from total receivables in a company's financial statements to show a more accurate picture of net revenue.

Sales Volume

The total quantity of sales of a product or service within a specified period.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.