Zen Phones, a producer of Cell phones, produced 4500 units at a total cost of $1

Question

Zen Phones, a producer of Cell phones, produced 4500 units at a total cost of $1, 150,000 in January. In February. Zen produced 3000 units at a total cost of $ 925,000. A. If a linear regression equation is fit using only these two points with number of units as the independent variable and cost as the dependent variable, what would be the slope of the line? What type of cost docs the slope represent? B. What would be the r^2 value for the regressed line? Give reason, if applicable. C. Suppose, in February, Zen produced 4000 units at a total cost of $ 1, 150,000? Does this change your answer for Question B? If yes, what would be the new value of the r^2? Give reason, if applicable.

Explanation / Answer

SolutionA:

number of units=475000+150(total cost)

SolutionB:

R sq=1

Coefficient of determination = R sq here it is 1

means 100% variation in number of units is explained by model

Solutionc:

yes

new observationa added

decreases r sq

New value is

R sq=0.892857

=89.29% variation in Regression is explained by model.

Here is ythe excel output for reference

SUMMARY OUTPUT Regression Statistics Multiple R 1 R Square 1 Adjusted R Square 65535 Standard Error 0 Observations 2

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