Assume That the Management of Dairy Deli Wants to Expand

question 14

Multiple Choice

Assume that the management of Dairy Deli wants to expand operations.To help evaluate the risks involved in opening an additional store,the company president wants to know the amount of fixed cost a new store will likely incur.Management uses the regression method to analyze the company's mixed costs.In terms of interpreting the results:

• A) a low R² statistic suggests that the independent value (units sold) more strongly influences the dependent variable (total cost).
• B) the R² statistic represents the percentage of change in the independent variable (units sold) that is explained by a change in the independent variable (total cost).
• C) the R² statistic represents the percentage of change in the dependent variable (total cost) that is explained by a change in the independent variable (units sold).
• D) the R² statistic is not a good measure of reliability.

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Definitions:

Dependent Variable

A variable in an experiment or model whose value is affected or determined by other variables, typically the outcome or response variable.

Y-intercept

The point where a line or curve intersects the y-axis of a graph.

Intercept

The value where a regression line crosses the y-axis, indicating the predicted value when all independent variables are zero.

Coefficient of Multiple Correlation

A statistical measure that represents the strength of the relationship between several independent variables and a single dependent variable.