Around Town, Inc. operates a small package delivery service in the Columbus suburbs. If the company uses a regression equation to forecast total operating costs, the equation's intercept would correspond to the:
A) variable operating cost per delivery.
B) fixed operating costs.
C) number of deliveries.
D) total variable operating costs.
E) total operating costs.

Question

Quizplus · Accepted Answer

The intercept in a regression equation represents the fixed costs, which are the costs that remain the same regardless of the level of activity (in this case, the number of deliveries). Therefore, the intercept corresponds to the fixed operating costs of the small package delivery service operated by Around Town, Inc.