STAT 301 - Business Statistics
Lecture Review #30 - Regression Applications

Review questions:

1) What is meant by the beta coefficient of a stock?

2) What is the security market line? What is the significance of the intercept of the regression line, in this context?

3) What are fixed and variable costs? How are they related to regression models?

4) What is a saturation model? Give an example to illustrate its use. Why is it often difficult to use linear regression techniques in this situation?

5) What is a catastrophe model? Give an example to illustrate its use. Why is it often difficult to use linear regression techniques in this situation?

Computational exercise:

Gilded Typo Printing, a subsidiary of the Sirius Cybernetics Corporation, publishes statistics textbooks. Production costs and figures for five of their leading titles are given below. (Both numbers are in thousands.)

a) Which is the "X" and the "Y" variable in this context?

b) Fit a regression line to these data. What are fixed and variable costs here?

c) Sketch a graph showing how production cost per book declines as number of books produced increases.