Instruction 16-2
a Certain Type of Rare Gem Serves as a Status

question 10

Multiple Choice

Instruction 16-2
A certain type of rare gem serves as a status symbol for many of its owners.In theory,for low prices,the demand decreases as the price of the gem increases.However,experts hypothesise that when the gem is valued at very high prices,the demand increases with price due to the status owners believe they gain in obtaining the gem.Thus,the model proposed to best explain the demand for the gem by its price is the quadratic model:
Y = β₀ + β₁X + β₂X² + ^ε
where Y = demand (in thousands) and X = retail price per carat.
This model was fit to data collected for a sample of 12 rare gems of this type.A portion of the computer analysis obtained from Microsoft Excel is shown below:
$\begin{array}{l|l|l|l|l|l|}\hline \text { SUMMARY } & & \\\hline \text { Regression } & \text { Statistics } & \\\hline \text { Multiple R } & & 0.994 \\\hline \text { R Square } & & 0.988 \\\hline \text { Std. Error } & & 12.42 \\\hline \text { Observations } & & 12 \\\hline\\\hline\text { ANOVA }\\\hline& \text { If } & \text { SS } & \text { MS } & F & \text { Sigưf F } \\\hline \text { Regression } & 2 & 115145 & 57573 & 373 & 0.0001 \\\hline \text { Residual } & 9 & 1388 & 154 & & \\\hline \text { Total } & 11 & 116533 & & & \\\hline\\\hline& \text { Coeff } & \text { StdError } & \text { Stat } & P \text {-Value } \\\hline \text { Intercept } & 286.42 & 9.66 & 29.64 & 0.0001 \\\hline \text { Price } & 0.31 & 0.06 & -5.14 & 0.0006 \\\hline \text { Price Sq } & 0.000067 & 0.00007 & 0.95 & 0.3647\\\hline\end{array}$ Note: Std.Error = Standard Error
-Referring to Instruction 16-2,and noting that this model includes both a linear and a quadratic term,what is the correct interpretation of the coefficient of multiple determination?

• A)98.8% of the total variation in demand can be explained by the linear relationship between demand and price.
• B)98.8% of the total variation in demand can be explained by the addition of the square term in price.
• C)98.8% of the total variation in demand can be explained by just the square term in price.
• D)98.8% of the total variation in demand can be explained by the quadratic relationship between demand and price.

---

Definitions:

Diversity Training

Educational programs or initiatives designed to increase awareness and respect for differences among employees in the workplace.

Personal Growth

The process of improving oneself through activities that enhance self-awareness, knowledge, and skills.

Diversity Training

Programs designed to increase participants' cultural awareness, knowledge, and skills to help them deal with workplace diversity effectively.

Training Outcomes

The results or achievements of a training program, including enhanced employee skills, improved performance, and increased knowledge.