Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information:
Intercept Coefficient = 89,620
X Variable 1 Coefficient = 62.53
R-square = 0.9852
Should your client use this information to predict monthly operating costs?
A) Yes, because R-square is so high.
B) No, because R-square is so high.
C) Yes, because regression analysis can be relied upon.
D) There is not enough information to make this prediction.

Question

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information: 
Intercept Coefficient = 89,620
X Variable 1 Coefficient = 62.53
R-square = 0.9852
Should your client use this information to predict monthly operating costs?
A) Yes, because R-square is so high.
B) No, because R-square is so high.
C) Yes, because regression analysis can be relied upon.
D) There is not enough information to make this prediction.

Quizplus · Accepted Answer

A high R-squared value indicates that the regression model fits the data well and can accurately predict outcomes. Therefore, the client should use this information to predict monthly operating costs.

Your Client's Company Wants to Determine the Relationship Between Its