The Manager of a Gas Station Along an Interstate Highway

question 50

Multiple Choice

The manager of a gas station along an interstate highway has observed that gasoline sales generally increase each week over the summer months as more families travel by car on vacations. He also believes that sales are sensitive to fluctuations in the price of gasoline. He developed the following regression model:
Sales ($) = $59,407 + $509 (Week) + 16,463 (Price/gallon)
-Which one of the following statements is TRUE?

• A) Sales decrease as a function of time.
• B) A $0.10 increase in the price of gas reduces weekly sales by 1,646 gallons.
• C) As the price of a gallon of gas increases, sales increase.
• D) None of the above is true.

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Definitions:

Lump Sum

A one-time payment made at a specific moment, rather than multiple smaller payments spread over time.

Savings Options

Various financial vehicles available for setting aside money, such as savings accounts, certificates of deposit, and money market funds, with the aim of earning a return.

Compounded Weekly

Refers to interest earned or paid that is calculated on a weekly basis, with each week's interest added to the principal amount.

Emergency Fund

A reserve of money set aside to cover unexpected expenses or financial emergencies.