1. A manager is trying to estimate costs. Three variables impact costs and are identified as: x1, x2, x3.

a. USE Worksheet Q1-Part-A. Estimate the linear model Cost = β0 + β1×1 + β2×2 + β3×3 + ɛ. Place results in cell J1. What is the predicted cost in a week during which x1 is 25, x2 is 28, and x3 is 75?

b. USE Worksheet Q1-Part-B. Estimate the exponential model. Place results in cell J1. What is the predicted cost in a week during which x1 is 38, x2 is 23, and x3 is 44?

c. USE Worksheet Q1-Part-C. Estimate the log-log model with x2 and x3 transformed. Place results in cell J1. What is the predicted cost in a week during which x1 is 65, x2 is 15, and x3 is 63?

d. Based on the explanatory power of the model which model provides the better fit? Do not make a fiat statement; provide evidence for your conclusion.

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