TABLE 12-1 A Large National Bank Charges Local Companies for Using Their

question 77

Multiple Choice

TABLE 12-1
A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) measured in dollars per month for services rendered to local companies. One independent variable used to predict service charges to a company is the company's sales revenue (X) measured in millions of dollars. Data for 21 companies who use the bank's services were used to fit the model:
Y1 - β0 + β1X1 + εi
The results of the simple linear regression are provided below.
Y = -2,700 + 20 X, SYX = 65, two-tail p-value = 0.034 (for testing β1)
-Referring to Table 12-1, a 95% confidence interval for β₁ is (15, 30) . Interpret the interval.

• A) You are 95% confident that the mean service charge will fall between $15 and $30 per month.
• B) You are 95% confident that the sales revenue (X) will increase between $15 and $30 million for every $1 increase in service charge (Y).
• C) You are 95% confident that mean service charge (Y) will increase between $15 and $30 for every $1 million increase in sales revenue (X).
• D) At the α = 0.05 level, there is no evidence of a linear relationship between service charge (Y) and sales revenue (X).

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Definitions:

Prices

The monetary value assigned to a product or service, determining how much it costs to buy.

Bundle

A combination of various goods and services selected by consumers, used in economics to analyze choices and preferences.

Giffen Good

A product that people consume more of as the price rises, violating the basic law of demand in economics.

Prices Change

A variation in the market price of goods and services over time, influenced by factors such as supply and demand, inflation, or government policy.