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# Simple Regression

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Simple Regression. The European Engine Company (EEC) is a multi-national manufacturer of small gasoline and diesel motors. EEC has estimated the following cost experience for a new 3.5 hp engine over a sample of 122 observations:

COST = \$8,500 + \$32 OUTPUT

Predictor Coef Stdev t ratio
Constant 8,500 5,000 1.7
OUTPUT 32 8 4.0

SEE = \$2,500 R2 = 75% = 74.8% F statistic = 360

where COST is the dependent Y variable and OUTPUT is the independent X-variable.

A. Fully interpret these simple regression results.
B. Describe this cost category as fixed or variable based upon the simple regression results described previously
(attached word doc.)

https://brainmass.com/economics/regression/simple-regression-european-engine-company-358374

#### Solution Preview

Simple Regression. The European Engine Company (EEC) is a multi-national manufacturer of small gasoline and diesel motors. EEC has estimated the following cost experience for a new 3.5 hp engine over a sample of 122 observations:

COST = \$8,500 + \$32 OUTPUT

Predictor Coef Stdev t ratio
Constant 8,500 5,000 1.7
OUTPUT 32 8 4.0

SEE = ...

#### Solution Summary

Simple regression results interpreted and cost category determined.

\$2.19