Use of Simple Linear Regression Analysis Assumes That

question 87

Multiple Choice

Use of simple linear regression analysis assumes that:

• A)variations around the line are nonrandom.
• B)deviations around the line are normally distributed.
• C)predictions can easily be made beyond the range of observed values of the predictor variable.
• D)all possible predictor variables are included in the model.
• E)the variance of error terms (deviations)varies directly with the predictor variable.

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Definitions:

Constrained Resource

A limited resource that restricts a company's ability to produce goods, offer services, or achieve its objectives.

Contribution Margin

The difference between the sales revenue and variable costs of a product, showing how much revenue contributes towards covering fixed costs and generating profit.

Avoidable Costs

Expenses that can be eliminated if a particular decision is made or if an activity is ceased.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not affect future business decisions.