11 Multiple Linear Regression Workbook
11 Multiple Linear Regression Workbook
11 Multiple Linear Regression Workbook
fuel is the most important material cost of power generation; therefore, the statewide average from
the firm's principal location, weighted by type of fuel (e.g., coal, oil, and gas) and BTU equivalent, is
used
Source: Nerlove, M. (1963). Returns to Scale in Electricity Supply. In C. F. Christ. (Ed.), Measurement
in Economics-Studies in Mathematical Economics and Econometrics in Memory of Yehuda Grunfeld.
Palo Alto, CA: Stanford University Press.
a.
What is the R2 of the regression? 0.072649528148427
b.
Only about 7.2% of the variability of "Total Cost" is explained by the
combination of "Wage rate," "capital price index" and "fuel price," suggesting
Interpret the R2. these three are not well-fit to explain "Total cost"
c.
"Wage rate" is the only independent variable which yields a p-value less than
Which independent variable(s) have a linear an assumed alpha=0.05 value, and thus, we come to the conclusion that "Wage
relationship with total cost, in this model? rate" is the only variable with linear relationship to "Total cost"
d.
Is there a linear relationship between total
cost and the independent variables? What
are the test statistic and the p-value of this
test? Only linear with "Wage rate", see part (c.)
linear relationship Yes
test statistic 3.28475998729207
p-value 0.001287634170729
e.
Assuming a wage rate of $2.00, a capital
price index of 200, and a weighted average
fuel price of $25, what is your prediction for
total cost? 16.2544426097512 ($mm)