=+3 Draw the regression line on your graph. Use your graph to evaluate the regression line using the criteria of economic plausibility, goodness of fit and significance of the independent variable. Is the cost function estimated using the high–low method a close approximation to the cost function estimated using the regression method? Explain briefly.

4 At what point (number of customers) will the expected total cost based on the high–low equation equal the expected total cost based on the regression equation?

Chapter 3: Determining how costs behave 119 M03_HORN3377_02_LT_C03.indd 119 2/09/13 3:20 PM