Exhibit 11.22 The Following Questions Use the Data Below

question 88

Essay

Exhibit 11.22
The following questions use the data below.
A store wants to predict quarterly sales. The owner has collected 3 years of sales data and wants your help in analyzing the data. He wants to use regression and a linear trend model.
-Refer to Exhibit 11.22. Interpret the R² value for your model.

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Definitions:

Negative Externality

A cost imposed without compensation on third parties by the production or consumption of sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river, killing fish prized by sports fishers. Also known as an external cost or a spillover cost.

Spillover Cost

A cost incurred by someone who is not a direct participant in a transaction, often referring to negative externalities resulting from economic activities.

Allocative Efficiency

occurs when resources are distributed in a manner that results in the optimal combination of goods and services produced to match consumer preferences.

Productive Efficiency

The production of a good in the least costly way; occurs when production takes place at the output level at which per-unit production costs are minimized.