An Estimated Linear Regression of Annual Fuel Expenditures Y on Annual

Multiple Choice

An estimated linear regression of annual fuel expenditures y on annual income x is represented as the following equation: y= 2,200 + 0.05x. Jim was offered a new job that would increase his salary by $2,000. What would be his potential increase in fuel costs? Based on this information, is the assumption of increased fuel cost against annual salary meaningful?

A) The increase in fuel cost is $100.00 annually; linearity assumption is justified.
B) The increase in fuel cost is $100.00 annually; linearity assumption is not justified.
C) The increase in fuel cost is $50.00 annually; linearity assumption is justified.
D) The increase in fuel cost is $1000.00 annually; linearity assumption is not justified.