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Figure: Hollywood Stock Exchange
-(Figure: Hollywood Stock Exchange) The data points in the figure represent the opening revenue for movies plotted against their predicted opening revenues according to the Hollywood Stock Exchange (HSX). Most of them fall along the 45-degree line. What does this suggest?
A) The HSX does not do a good job predicting movie revenues.
B) On average, most movies do worse than their HSX predictions.
C) On average, the HSX accurately predicts movie revenues.
D) On average, most movies do better than their HSX predictions.

Question

Use the following to answer questions:
Figure: Hollywood Stock Exchange 
-(Figure: Hollywood Stock Exchange) The data points in the figure represent the opening revenue for movies plotted against their predicted opening revenues according to the Hollywood Stock Exchange (HSX). Most of them fall along the 45-degree line. What does this suggest?
A) The HSX does not do a good job predicting movie revenues. 
B) On average, most movies do worse than their HSX predictions. 
C) On average, the HSX accurately predicts movie revenues. 
D) On average, most movies do better than their HSX predictions.

Quizplus · Accepted Answer

The fact that most data points fall along the 45-degree line suggests that the HSX is accurately predicting movie revenues on average. If the HSX did not do a good job predicting movie revenues, we would see data points that deviate significantly from the line. If most movies did worse than their HSX predictions, we would see data points below the line. If most movies did better than their HSX predictions, we would see data points above the line.

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