The Editors of a National Automotive Magazine Recently Studied 30

question 57

Multiple Choice

The editors of a national automotive magazine recently studied 30 different automobiles sold in the United States with the intent of seeing whether they could develop a multiple regression model to explain the variation in highway miles per gallon.A number of different independent variables were collected.Included in these were two variables described as follows: If these two variables are to be included in a regression model,how many additional variables will be needed?

• A)The model explains nearly 63 percent of the variation in the dependent variable.
• B)If tested at the 0.05 significance level,the overall model would be considered statistically significant.
• C)The variable X1 has a slope coefficient that is significantly different from zero if tested at the 0.05 level of significance.
• D)All of the above are true.

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Definitions:

External Cost

A cost of economic activity not borne by the producer or consumer, but rather by a third party or the environment, often leading to market failure.

Efficient Amount

The quantity of a product or service that achieves a perfect balance between economic efficiency and the satisfaction of all market participants.

Government Intervention

Actions taken by a government to adjust or interfere in the economic affairs of a nation, with the intention of achieving economic or societal objectives.

External Cost

Costs of a transaction that affect people other than the buyer or seller, typically not reflected in the market price, such as pollution or other negative externalities.