A manager wishes to estimate an average cost equation of the following form: $C = a + b Q + c Q ^ { 2 }$ where Q is the level of output.Letting Z = Q² and using least-squares estimation,the manager obtains the following computer output: Given the above information,the value of R² indicates that _______ of the total variation in C is explained by the regression equation. A)0.7679% B)76.79% C)7.679% D)7679%

Question

Quizplus · Accepted Answer

The value of R² (aka R-squared) indicates the proportion of the total variation in the dependent variable (C) that is explained by the independent variables (Q and Q^2) in the regression equation. The output shows that R² is 0.7679, which is equal to 76.79%. Therefore, the best choice is B, which means that 76.79% of the total variation in C is explained by the regression equation.

A Manager Wishes to Estimate an Average Cost Equation of the Following