Instruction 13.17 A Microeconomist Wants to Determine How Corporate Sales Are Influenced

question 129

Multiple Choice

Instruction 13.17
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies. She proceeds to randomly select 26 large corporations and record information in millions of dollars. The Microsoft Excel output below shows results of this multiple regression.
Note: Adj. R Square = Adjusted R Square; Std. Error = Standard Error
-Referring to Instruction 13.17,when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable,he obtained an r² value of 0.601.What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

• A) 60.1%
• B) 22.9%
• C) 8.8%
• D) 31.1%

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded for a given period.

Short-Run Equilibrium

Short-run equilibrium occurs when in a market, the quantity supplied equals the quantity demanded at the current price, before any long-term adjustments are made.

MR > MC

A situation in marginal analysis where the marginal revenue (MR) exceeds the marginal cost (MC), suggesting a potential increase in profitability by expanding production.

P > ATC

A scenario in which the price of a good is greater than the average total cost of producing that good, indicating potential profitability for the firm.