Recent research into the cost of various medical procedures has shown the impact of certain complications encountered in surgery on the total cost of a patient's stay in the hospital. The researchers used regression analysis and found the following results:

 

Total cost for patient = Constant, plus

 

a × Length of stay (measured in days), plus

b × Presence of one or more complications (= 1 if true, 0 if false), plus

c × Use of a laparoscope (= 1 if true, 0 if false)

 

where a, b, c are coefficients of the regression model. The laparoscope is an instrument somewhat like a miniature telescope with a fiber-optic system that brings light into the abdomen. It is about as big around as a fountain pen and twice as long.

 

The research, based on 64 patients, showed the following regression results:

 

R-squared: 57%

Constant term: $3,849

 

Coefficients and t-values for independent variables:

Required:

1. What is the estimated cost for a patient whose surgery has complications and who stays in the hospital 3 days, and whose surgery requires a laparoscope?

2. Which, if any, dummy variables are used in this regression?

• Length of Stay (Measured in Days)
• Complications were present
• Use of a laparoscope