Question

6. Parker, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: Regression Statistics Multiple R 0.8274 R Square 0.8229 Observations 26 Coefficients Standard Error T Stat Intercept 23,859 5,196 3.65 Production (X) 3.13 0.2765 11.19 What total cost would Parker predict for a month in which they sold 3,500 units

Answer 1

"34,814" is the correct solution.

Explanation:

The given values are:

Intercept coefficient,

`\beta_0 = 23,859`

Production coefficient,

`\beta_1 = 3.13`

Units sold,

x = 3,500

Now,

The total cost will be:

⇒
`\bar{y}=\beta_0+\beta_1 x`

On substituting the estimated values, we get

⇒
`=23,859+3.13* 3,500`

⇒
`=23,859+10,955`

⇒
`=34,814`