Question
The management of the SleepTight Motel is interested in estimating the fixed and variable costs of monthly electricity usage based upon motel occupancy. Management plans
The management of the SleepTight Motel is interested in estimating the fixed and variable costs of monthly electricity usage based upon motel occupancy. Management plans to estimate a simple linear model where the dependent variable is total monthly electricity costs (measured in hundreds of dollars) and the independent variable is the number of guest days (measured in the thousands). The motel uses 12 months of data and generates the following information: EX = 42 EY = 72 EX2 = 185 EY2 = 486 EXY = 295
B. Calculate the estimated marginal cost of electricity (b1) and interpret its meaning. (6 pts)
c. Calculate the fixed costs of electricity (bo). (4 pts)
d. CALCULATE and INTERPRET the coefficient of determination. (7 pts)
e. If the motel expects an occupancy rate of 5000 guest-days next month, what is the estimated total electricity cost for that month? (4 pts)
f. For your answer to part (e) how much of total cost is fixed and how much is variable cost? (3 pts each)
f. Test whether or not the motel occupancy rate is linearly related to the total electricity costs. Use alpha = 0.01. SHOW ALL TEST PARTS.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started