Green Mountain College is a 5,000 student state-supported, four-year institution located in the mid-South. Physical facilities can accommodate another 1,000 students, and the college administration is attempting to estimate the added yearly cost of educating the additional students. The Business Manager of Green Mountain College has asked you to evaluate two linear regressions given below, and recommend the better one to her. Where: SC = Student cost
CH = Cost per credit hour
IS = Incremental cost per student
Required:
(1) Explain your choice of cost function (regression 1 or regression 2) for predicting added student educational costs per year.
(2) What information value does the standard error of estimate (SE) have in this situation?

Question

Green Mountain College is a 5,000 student state-supported, four-year institution located in the mid-South. Physical facilities can accommodate another 1,000 students, and the college administration is attempting to estimate the added yearly cost of educating the additional students. The Business Manager of Green Mountain College has asked you to evaluate two linear regressions given below, and recommend the better one to her.  Where: SC = Student cost
CH = Cost per credit hour
IS = Incremental cost per student
Required:
(1) Explain your choice of cost function (regression 1 or regression 2) for predicting added student educational costs per year.
(2) What information value does the standard error of estimate (SE) have in this situation?

Quizplus · Accepted Answer

The Answer of Green Mountain College is a 5,000 student state-supported, four-year institution located in the mid-South. Physical facilities can accommodate another 1,000 students, and the college administration is attempting to estimate the added yearly cost of educating the additional students. The Business Manager of Green Mountain College has asked you to evaluate two linear regressions given below, and recommend the better one to her.  Where: SC = Student cost
CH = Cost per credit hour
IS = Incremental cost per student
Required:
(1) Explain your choice of cost function (regression 1 or regression 2) for predicting added student educational costs per year.
(2) What information value does the standard error of estimate (SE) have in this situation?

Green Mountain College Is a 5,000 Student State-Supported, Four-Year Institution