Question

An insurance company wants to determine how its annual operating costs depend on the number of home insurance (X1) and automobile insurance (X2) policies that have been written. The file P10_31.xlsx contains relevant information for 10 branches of the insurance company. The company believes that a multiplicative model might be appropriate because operating costs typically increase by a constant percentage as the number of either type of policy increases by a given percentage.
Use the given data to estimate a multiplicative model for this insurance company. Interpret your results. Does a multiplicative model provide a good fit with these data? Answer by calculating the appropriate standard error of estimate and R2 value, based on original units of the dependent variable.



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  • CreatedApril 01, 2015
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