A Test Is Conducted in 22 Cities to See If

question 95

Multiple Choice

A test is conducted in 22 cities to see if giving away free transit system maps will increase the number of bus riders.In a regression analysis,the dependent variable Y is the increase in bus riders (in thousands of persons) from the start of the test until its conclusion.The independent variables are X₁ = the number (in thousands) of free maps distributed and a binary variable X₂ = 1 if the city has free downtown parking,0 otherwise.The estimated regression equation is . In city 3,the observed Y value is 7.3 and X₁ = 140 and X₂ = 0.The residual for city 3 (in thousands) is:

• A) 6.15.
• B) 1.15.
• C) 4.83.
• D) 1.57.

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Definitions:

Total Variable Cost

The sum of all variable expenses related to the production of goods or services, which change with the level of output.

Average Variable Cost

The variable cost (costs that change with production volume) divided by the quantity of output produced.

Marginal Cost

The increase or decrease in the total cost incurred by producing one additional unit of a product or service.

Total Variable Costs

The sum of expenses that vary directly with the level of output production.