The Editors of a National Automotive Magazine Recently Studied 30

question 6

Multiple Choice

The editors of a national automotive magazine recently studied 30 different automobiles sold in the Canada with the intent of seeing whether they could develop a multiple regression model to explain the variation in highway fuel consumption. A number of different independent variables were collected. Included in these were two variables described as follows: If these two variables are to be included in a regression model, how many additional indicator variables will be needed?

• A) 6
• B) 8
• C) 2
• D) 4
• E) 5

---

Definitions:

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Variable Costs

Expenses that vary directly with the level of production or output, including costs such as raw materials and labor directly involved in manufacturing.

Price Changes

Alterations in the cost of goods or services over time, which can be influenced by factors such as supply and demand.

Agricultural Act

Legislation that regulates agricultural production, marketing, and subsidies.