Suppose that the weekly price of milk is $3.40 per gallon and MPEP decides to ramp up weekly advertising by 35 percent to $150 (in hundreds). Use the best-fitting regression model to estimate the weekly quantity of milk consumed after this advertising increase.

Total Cost increase 5,253.4 unit

Explanation:

given data

weekly price a = $3.40 per gallon

ramp up weekly b = 35%

ramp up weekly upto x = $150 (in hundred)

solution

we will use here the regression equation that is

Y = a + b x ... 1

here Y is Total Cost and a is fixed cost and

b is rate of variability and x is level of activity

so here put value in equation 1 we get

Total Cost Y = 3.40 + 0.35 * (15,000)

Total Cost Y = 3.40 + 5,250

Total Cost increase 5,253.4 unit