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# hw8 - STATISTICS 500 Fall 2009 Homework 8 handed out Friday...

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STATISTICS 500 – Fall 2009 Homework 8, handed out Friday, 23 Oct 2009 on campus Friday, 30 Oct 2009, in lecture (11 am) or by e-mailto Chuanlong, [email protected], no later than noon. off campus Monday, 2 Nov 2009, by 4 pm to Nicole Rembert, email: [email protected] or FAX: 515-294-4040 (please include cover page with Stat 500 / Nicole Rembert). 1. Multiple regression and tests — linerboard production The file mill.txt contains production information about linerboard, a paper product. The amount of linerboard produced for each of 25 months is recorded (PRODUCT), along with the cost of raw materials (RAWMAT), energy usage in btus (ENERGY), mill depreciation (DEPREC) and labor costs (LABOR). In economics, a Cobb-Douglas production function has the form PRODUCT = β o ( RAWMAT ) β 1 ( ENERGY ) β 2 ( DEPREC ) β 3 ( LABOR ) β 4 × ( ERROR ) . One hypothesis of particular interest is β 1 + β 2 + β 3 + β 4 = 1. This is the hypothesis of constant returns to scale – if the hypothesis is true, then multiplying all of the predictors (inputs) by a constant would lead to the response (output) being multiplied by the same constant. Fit the Cobb-Douglas function to these data. Ask if you don’t know or don’t remember how to convert functions like this to a multiple linear regression. Then, answer the following questions.

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