An Over-The-Counter Drug Manufacturer Wants to Examine the Effectiveness of a New

question 62

Multiple Choice

An over-the-counter drug manufacturer wants to examine the effectiveness of a new drug in curing an illness most commonly found in older patients. Thirteen patients are given the new drug and 13 patients are given the old drug. To avoid bias in the experiment, they are not told which drug is given to them. To check how the effectiveness depends on the age of patients, the following data have been collected. The variables are Effectiveness = the response variable measured on a scale from 0 to 100,
Age = the age of a patient (in years) ,
Drug = a binary variable with 1 for the new drug and 0 for the old drug.
The regression model, Effectiveness = β₀ + β₁Age + β₂Drug + β₃Age × Drug, is estimated and the following results are obtained. Which of the following is the estimated regression model?

• A) = 0.34Age - 40.86Drug + 0.70Age × Drug
• B) = 3.15 + 0.07Age - 4.08Drug + 0.09Age × Drug
• C) = 14.94 + 5.06Age - 10.02Drug + 7.94Age × Drug
• D) = 47.04 + 0.34Age - 40.86Drug + 0.70Age × Drug

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Definitions:

Unit Materials Cost

The cost assigned to individual units that includes the direct materials expense required to produce each unit, integral for calculating the total production cost.

Process Cost System

An accounting system used to apply costs to similar products that are mass-produced in a continuous fashion.

Manufacturing Overhead

All indirect costs related to the manufacturing process, including costs for management, utilities, and equipment maintenance not directly tied to the production.

Work In Process

Inventory that includes goods partially completed; represents raw materials, labor, and overhead costs incurred in the manufacturing process.