The scatter graph method used to establish a cost relationship:
A) displays a constant level of cost for a range of output.
B) uses only two data points to build the graph.
C) is a good way to identify nonlinearity.
D) All of these are correct.

Question

Quizplus · Accepted Answer

The scatter graph method is a good way to visualize the shape of the relationship between two variables. It can help identify nonlinearity in the relationship, which a straight-line regression model would not be able to capture. Option A is incorrect because a constant level of cost for a range of output would result in a horizontal line, not a scatter plot. Option B is incorrect because using only two data points would not be sufficient to establish a meaningful relationship.

The Scatter Graph Method Used to Establish a Cost Relationship