Question

Certain private water utilities in South Carolina charge a variable rate for the drinking water they provide to residences. One customer's bills over a 23-month period were used to fit a linear regression in an attempt to predict charges on future bills according to gallons consumed. The resulting regression equation is Bill Amount = 23.2 + (7.67 x Thousand Gallons)

Which of the following is a correct statement resulting from this regression line?
A) On average, the gallons consumed increase by 23.2 thousand gallons for each additional dollar added to the bill amount.
B) On average, the bill amount increases by 7.67 dollars for each additional thousand gallons consumed.
C) On average, the gallons consumed increase by 7.67 thousand gallons for each additional dollar added to the bill amount.
D) On average, the bill amount increases by 23.2 dollars for each additional thousand gallons consumed.

Answer 1

B) On average, the bill amount increases by 7.67 dollars for each additional thousand gallons consumed.

Explanation:

The Bill amount is modeled by the following first order equation:

Bill Amount = 23.2 + (7.67 x Thousand Gallons).

This means that if no extra gallons are consumed, the bill is 23.2.

However, for each thousand gallons consumed, the bill increases 7.67 dollars.

So the correct answer is:

B) On average, the bill amount increases by 7.67 dollars for each additional thousand gallons consumed.