A company offers vacations in the Caribbean including charter f lights from Toronto’s downtown airport at a range of prices per person assuming double occupancy. It plans to offer the same vacations at the same prices next year. Over the past year sales have been as follows:

Selling Price per Vacation ($K)                  Sales Revenue ($m)
0.88..............................................................................................16.3
1.078............................................................................................19.7
1.232............................................................................................21.5
1.672............................................................................................24.8
2.156............................................................................................26.7
2.464............................................................................................29.1
2.816...............................................................................................28
3.058............................................................................................19.6
3.388............................................................................................19.5
3.784............................................................................................12.4
4.158............................................................................................13.9
4.378..............................................................................................7.2

The company is negotiating with two new hotels and may be able to offer vacations next year at $1340 and $1750 selling price. These prices would fill gaps in the existing range of selling prices.

a) Use linear regression to estimate the relationship between the number of vacations sold and selling price (explanatory variable). Give the equation for the relationship.

b) How many vacations do you estimate they could sell next year at $1340 and $1750? Give a 95% interval on your estimate.

c) How many vacations do you estimate they could sell on average over several years at $1340 and $1750? Give a 95% interval on your estimate.

d) Comment on the difference between the 95% intervals in parts (b) and (c).