The Slope Coefficient Estimate B from a Regression of Profits

question 43

Multiple Choice

The slope coefficient estimate b from a regression of profits on sales of a number of firms in the coal industry is 0.075.How should you interpret this coefficient?

• A) Average profit in the coal industry is 7.5%.
• B) If a firm in the coal industry were to increase its sales by $1, its profits would rise on average by $0.075.
• C) If a firm has 1 more dollar in sales than another firm in the coal industry, it will have 7.5 more cents in profit on average.
• D) Average profit in the coal industry is .75%.
• E) If a firm in the coal industry were to increase its sales by $1, its profits would rise on average by $0.0075.

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