The Quadratic and Logarithmic Models,y = β₀ + β₁x

question 29

Multiple Choice

The quadratic and logarithmic models,y = β₀ + β₁x + β₂x² + ε and y = β₀ + β₁ ln(x) + ε,were used to fit given data on y and x,and the following table summarizes the regression results.Which of the two models provides a better fit?

• A) The quadratic model.
• B) The logarithmic model.
• C) The models are not comparable.
• D) The provided information is not sufficient to make the conclusion.

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Definitions:

Variable Expense

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Break-Even

The moment when total income matches total expenses, creating a situation with neither profit nor loss.

Unit Sales

The quantity of products sold by a company in a given period.

Variable Expense

Costs that fluctuate in direct proportion to changes in an organization's activity level or volume of output, such as raw material costs.