TABLE 13-1 A large national bank charges local companies for using their services.A bank official reported the results of a regression analysis designed to predict the bank's charges (Y)-measured in dollars per month-for services rendered to local companies.One independent variable used to predict service charges to a company is the company's sales revenue (X)-measured in millions of dollars.Data for 21 companies who use the bank's services were used to fit the model: Y i = β 0 + β 1 X i + ε i The results of the simple linear regression are provided below. -Referring to Table 13-1,interpret the estimate of β₀,the Y-intercept of the line. A)All companies will be charged at least $2,700 by the bank. B)There is no practical interpretation since a sales revenue of $0 is a nonsensical value. C)About 95% of the observed service charges fall within $2,700 of the least squares line. D)For every $1 million increase in sales revenue,we expect a service charge to decrease $2,700.

Question

Quizplus · Accepted Answer

The Y-intercept, β₀, represents the estimated service charge when sales revenue is $0. Since a sales revenue of $0 is not practical for companies, the intercept has no meaningful interpretation in this context.

TABLE 13-1 A Large National Bank Charges Local Companies for Using Their