Your Client's Company Wants to Determine the Relationship Between Its

question 5

Multiple Choice

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information: Intercept Coefficient = 75,828
X Variable 1 Coefficient = 52.61
R-square = 0.9756
Should your client use this information to predict monthly operating costs?

• A)No, because R-square is so high.
• B)Yes, because R-square is so high.
• C)Yes, because regression analysis can always be relied upon.
• D)There is not enough information to make this prediction.

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Definitions:

Cheapest Product

The item or service offered at the lowest price among a range of products.

Proximity

The state of being close or near in space, time, or relationship.

Small Business Owner's Product

A product or service that is offered by an entrepreneur owning and running a small-scale business.

Breakeven Point

The level of production or number of sales at which costs equal revenues, resulting in neither profit nor loss.