Cost Estimation. Natural Gas, Inc., has just completed a cost study of its natural gas production operation. By regressing total variable costs (in $000) per week on gas output, the following equation was estimated:
Here Q is natural gas production in thousand cubic feet (units) and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation is 85%, and the standard error of the estimate is 50 for the weekly observations over a two-year period.

Question

Cost Estimation. Natural Gas, Inc., has just completed a cost study of its natural gas production operation. By regressing total variable costs (in $000) per week on gas output, the following equation was estimated:

Here Q is natural gas production in thousand cubic feet (units) and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation is 85%, and the standard error of the estimate is 50 for the weekly observations over a two-year period.

Quizplus · Accepted Answer

The Answer of Cost Estimation. Natural Gas, Inc., has just completed a cost study of its natural gas production operation. By regressing total variable costs (in $000) per week on gas output, the following equation was estimated: Here Q is natural gas production in thousand cubic feet (units) and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation is 85%, and the standard error of the estimate is 50 for the weekly observations over a two-year period.