TABLE 14-5 A Microeconomist Wants to Determine How Corporate Sales Are Influenced

question 109

Multiple Choice

TABLE 14-5
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.
-Referring to Table 14-5, when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable, she obtained an r² value of 0.601. What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

• A) 60.1%
• B) 31.1%
• C) 22.9%
• D) 8.8%

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Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue; also known as the bottom line.

Income and Losses

Represents the financial performance of a business, where income refers to the earnings and losses indicate the expenses exceeding earnings over a period.

Original Investments

The initial amount of money put into purchasing assets or starting a venture, setting the foundation for future growth or income.

Net Income

The total profit or loss a company, generates after all expenses, taxes, and costs have been deducted from total revenue.