Refer to the information provided in Table 36.3 below to answer the question(s) that follow.
Table 36.3
The data in the table was used to estimate the following consumption function: C = 20 + 0.2Y
-Refer to Table 36.3. The error for point B is equal to
A) -3.
B) -1.
C) +1.
D) +3.

Question

Refer to the information provided in Table 36.3 below to answer the question(s) that follow.
Table 36.3
  The data in the table was used to estimate the following consumption function: C = 20 + 0.2Y
-Refer to Table 36.3. The error for point B is equal to
A) -3. 
B) -1. 
C) +1. 
D) +3.

Quizplus · Accepted Answer

The consumption function estimated from the data is C = 20 + 0.2Y, where C is consumption expenditure and Y is income. The error for a given point is the actual consumption expenditure (observed in the data) minus the consumption expenditure predicted by the estimated function.

For point B, the actual consumption expenditure is 24 and the predicted consumption expenditure is 22 (according to the estimated function). So, the error for point B is:

Error for B = 24 - 22 = +2

Thus, the closest option is D) +3.

Refer to the Information Provided in Table 36