In the Model Y = β₀ + β₁x + β₂d

question 88

Multiple Choice

In the model y = β₀ + β₁x + β₂d + β₃xd + ε, the dummy variable and the interaction variable cause ________.

• A) a change in just the intercept
• B) a change in just the slope
• C) a change in both the intercept as well as the slope
• D) None of these choices are correct.

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Definitions:

Financial Break-Even

The point at which a project or company generates enough income to cover all its financial costs, including interest and principal repayments.

Discount Rate

The interest rate that the Federal Reserve charges banks for short-term loans, also used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Project Initial Outlay

The initial investment amount required to start a project, typically including costs such as equipment, installation, and initial operating expenses.

Break-Even Quantity

The amount of product that must be sold to cover the costs of production, resulting in neither a profit nor a loss.