1

You are interested in starting a specialty coffee shop, but you need to establish how the volume of production will affect your average total costs before you can complete your business plan. You have a friend with connections in the industry, and she obtains the average total cost per cup for a random sample of several establishments in your region. The final data set your friend compiles contains information on 61 coffee shops including the average total cost of production (in cents per cup) and the rate of output (in cups per hour). 150 O E 125 - 'E i g 100 ' '3 5 .2 o g 15 - 3 50 _ I I I I I l 40 50 an 70 60 an Output Rate (cups/hr] Reference: Ref 101 4 The regression output for this simple linear regression model is given below: The regression output for this simple linear regression model is given below: Regression Statistics: R2 = 0.6669 Adj.R2 = 0.6613 s = 12 s, = 20.6 5: = 11.3 9 = 96.2 :E = 57.1 AN OVA Source DF Sum of Mean Square F Value Prob > F Squares 17003.4 17003.4 119.13