Consider the Following to Answer the Question(s) Below

question 4

Multiple Choice

Consider the following to answer the question(s) below:
National birth rates (births per 1,000) may be influenced by the average national life expectancy in years and the national literacy rate (% of population that can read and write) . Data for 49 countries were obtained and the regression results follow.
-If an additional explanatory variable was added to the model, what would happen to R2?

• A) It would stay the same or increase.
• B) It would always decrease.
• C) It can decrease.
• D) It can become negative.
• E) If the coefficient of the additional variable is negative, R2 dramatically decreases.

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Definitions:

Work In Process

Inventory representing the cost of incomplete goods that are still in the process of being manufactured at a given point in time.

Direct Materials

The raw materials directly used in the production of a product, easily traceable to the finished good.

Materials Cost

The total expense incurred from acquiring raw materials used in the production of goods.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory are determined by calculating the average cost of all inventory items.