An Real Estate Analyst Believes That the Three Main Factors

question 8

Multiple Choice

An real estate analyst believes that the three main factors that influence an apartment's rent in a college town are the number of bedrooms,the number of bathrooms,and the apartment's square footage.For 40 apartments,she collects data on the rent (y,in $) ,the number of bedrooms (x₁) ,the number of bathrooms (x₂) ,and its square footage (x₃) .She estimates the following model as Rent = β₀ + β₁ Bedroom + β₂ Bath + β₃ Sqft + ε.The following ANOVA table shows a portion of the regression results. The slope coefficient attached to Bedroom indicates that,holding other explanatory variables constant,____________.

• A) an additional bedroom increases rent,on average,by $226
• B) an additional bedroom increases rent,on average,by $526
• C) an additional $226 in rent will lead to an additional bedroom
• D) an additional $526 in rent will lead to an additional bedroom

---

Definitions:

Fixed Cost Financing

A financing strategy where the costs remain constant regardless of the level of production or sales.

Future Cash Flows

Expected cash receipts and payments a business anticipates receiving or paying out over a future period.

Bias

A preconception or inclination towards something, potentially leading to unfair judgments or decisions in various contexts.

Incremental Overhead

The additional indirect costs incurred due to a change in business activities, such as an increase in production volume.