Answer to Question 1
D
Answer to Question 2
Although we have three types of credit cards (Visa, MasterCard, and other), this information can be represented by only two qualitative variables. The equation will have this form: Dollars = b0 + b1Minutes + b2Visa + b3MasterCard. The coding of the two qualitative variables: Visa=1 if customer used Visa card, otherwise=0; and MasterCard=1 if customer used MasterCard, otherwise=0 . For example, the data for a customer who spent 50 during a 10-minute visit to the site and used Master Card could be listed as 50, 10, 0, and 1 . If the same customer had used a card other than Visa or MasterCard, her data could have been listed as 50, 10, 0, and 0.