Figure 3-12

question 8

Multiple Choice

Figure 3-12.The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance. The following computer output was received:
The driver used was the number of machine hours.
-Refer to Figure 3-12. What was the cost formula for equipment maintenance?

• A) total maintenance cost = $25 * machine hours
• B) total maintenance cost = $32,000
• C) total maintenance cost = $32,000 + ($25 * machine hours)
• D) None of these are correct.

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Definitions:

Deadweight Loss

A loss in economic efficiency that can occur when equilibrium for a good or service is not achieved or is not achievable.

Price Ceiling

A government-imposed limit on how high the price of a product can be, intended to protect consumers from high prices.

Monopolist

A single seller in a market who controls the supply of a product or service, and thus, has significant power to set prices.

Deadweight Loss

The drop in economic productivity happening when the optimal free market balance for a good or service isn't met.