Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A salon is currently located far-off from the main city. The owner is considering to shift his salon close to the main city as it

A salon is currently located far-off from the main city. The owner is considering to shift his salon close to the main city as it would increase his revenues. However, he supposes that as he moves closer to the city, he would have to pay a higher rent. He collects data by surveying 150150 prospective locations and estimates the OLS regression: ModifyingAbove PR with caret Subscript i Baseline equals 2.3 minus 1.2 d Subscript iPRi=2.31.2di, where ModifyingAbove PR with caret Subscript iPRi represents the predicted extra rent (measured in thousands of dollars) he has to pay corresponding to its distance (d Subscript idi) (measured in kilometers or km) between the salon and the main city. From the sample data, he makes the following calculations. Summation from i equals 1 to 150 left parenthesis PR Subscript i Baseline minus PR overbar right parenthesis squared equals 160.23i=1150PRiPR2=160.23. Summation from i equals 1 to 150 left parenthesis PR Subscript i Baseline minus ModifyingAbove PR with caret right parenthesis squared equals 154.16i=1150PRiPR2=154.16. According to the estimated regression function, if the owner moves one km towards the city he has to pay an extra rent of $1 comma 2001,200. He wants to check how well

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurship

Authors: Andrew Zacharakis, William D Bygrave

5th Edition

1119563097, 9781119563099

More Books

Students also viewed these Mathematics questions

Question

How do the events of normal aging affect life satisfaction?

Answered: 1 week ago

Question

Discuss the advantages and disadvantages of cloud computing.

Answered: 1 week ago