Consider the Following Regression Model: Humidity = β₀ + β₁Temperature

question 44

Multiple Choice

Consider the following regression model: Humidity = β₀ + β₁Temperature + β₂Spring + β₃Summer + β₄Fall + β₅Rain + ε, where the dummy variables Spring, Summer, and Fall represent the qualitative variable Season (spring, summer, fall, winter) , and the dummy variable Rain is defined as Rain = 1 if rainy day, Rain = 0 otherwise.
What is the regression equation for the winter days?

• A) = (b₀ + b₃) + b₁Temperature + b₅Rain
• B) = (b₀ + b₂ + b₃ + b₄) + b₁Temperature + b₅Rain
• C) = b₀ + b₁Temperature + b₅Rain
• D) = (b₀ + b₅) + b₁Temperature + b₅Rain

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Definitions:

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred.

Variable Production

Production processes or costs that change in proportion to the output level or activity of a company.

Fixed Costs

Expenses that do not change in proportion to the level of goods or services produced within a certain scale, such as rent or salaries.