A Sample of General Mills Employees Was Studied to Determine

question 98

Multiple Choice

A sample of General Mills employees was studied to determine their degree of satisfaction with their present life. A special index, called the index of satisfaction, was used to measure satisfaction. Six factors were studied: age at the time of first marriage (X₁) , annual income (X₂) , number of children living (X₃) , value of all assets (X₄) , status of health in the form of an index (X₅) , and the average number of social activities per week (X₆) . Suppose the multiple regression equation is: Y' = 16.24 + 0.017X₁ + 0.00028X₂ +42X₃ + 0.0012X₄ + 0.19X₅ + 26.8X₆.
What is the estimated index of satisfaction for a person who first married at 25, has an annual income of $46,000, has two children, has assets of $350,000, has in index of health status of 141, and has 2.5 social activities per week?

• A) 368.3
• B) 421.6
• C) 366.0
• D) 627.3
• E) 769.8

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Definitions:

Utility

A measure of satisfaction or value that consumers receive from consuming goods and services.

Endowment Effect

The tendency people have to place higher valuations on items they possess (are endowed with) than on identical items that they do not possess; perhaps caused by loss aversion.

Behavioral Economists

Economists who study how psychological, social, cognitive, and emotional factors affect the economic decisions of individuals and institutions.

Inconsistent Anchoring

A cognitive bias where individuals rely too heavily on an initial piece of information (anchor) to make subsequent judgments but inconsistently adjust away from that anchor.