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

Multiple Choice

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 = β₀ + β₁X_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.