Suppose a Rental Car Company Uses Simple Linear Regression to Develop

question 108

Multiple Choice

Suppose a rental car company uses simple linear regression to develop an equation that predicts the repair costs for each of its vehicles based on the mileage of the car (total miles driven) .The company uses the following data on repair costs and miles driven for five of its cars: The least squares line predicts that if the mileage of a car increases by 10,000 miles, its annual repair costs will increase by an estimated:

• A)$13.85
• B)$64.64
• C)$138.52
• D)$144.96

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Definitions:

Buildings

Physical structures owned by a business, typically used for offices, manufacturing, or storage.

Equipment

Tangible property used in the operation of a business, not intended for sale, such as machinery, computers, and tools.

Natural Resources

Assets that are found in nature and are used for economic gain, such as oil, forests, minerals, or water.

Depletion Expense

An accounting approach for allocating the cost of extracting natural resources from the earth over the period of their extraction.