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

question 113

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 dummy variable that is 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 true?

Definitions:

Linear Demand Curve

A demand curve that shows a constant relationship between price and quantity demanded, typically resulting in a straight line when graphed.

Total Revenue

The overall amount of money generated by a business from selling its goods or services, without subtracting any costs.

Price Elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good to a change in its price, indicating how changes in price affect consumer demand or supply levels.

Linear Demand Curve

Represents a straight-line graph which shows the inverse relationship between the price of an item and the quantity demanded, assuming other factors remain constant.