Answer :
The total cost equation with multiple regression is more reliable than the one with linear regression as it considers additional independent variables, providing a more accurate estimation of the cost.
The given data represents a set of cost values corresponding to different combinations of interior square feet and external openings.
To compute the total cost equation for the currently used interior square feet independent variable, we can use linear regression. Linear regression helps us find the best-fitting line that represents the relationship between two variables. In this case, the independent variable is the interior square feet, and the dependent variable is the cost.
By using the given data, we can apply linear regression to find the equation for the relationship between interior square feet (x) and cost (y). This equation will help us estimate the cost based on the interior square feet.
To compute the total cost equation when both interior square feet and external openings are used as independent variables, we can use multiple regression. Multiple regression allows us to consider multiple independent variables in the equation. In this case, the independent variables are interior square feet (x1) and external openings (x2), and the dependent variable is the cost (y).
By using the given data, we can apply multiple regression to find the equation for the relationship between interior square feet, external openings, and cost. This equation will help us estimate the cost based on both the interior square feet and external openings.
Now, comparing the reliability of the total cost equations, we can consider the fixed costs provided. The linear regression fixed cost is 789.62, while the multiple regression fixed cost is 1,385.74.
The total cost equation with the higher fixed cost, in this case, the multiple regression equation, is generally more reliable. The higher fixed cost suggests that it takes into account more factors and provides a more accurate estimate of the cost. The multiple regression equation considers both the interior square feet and external openings, which can have an impact on the cost.
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