Question: Carol Tandem, manager of Prescott’s Downtown Cycle-rama, (Just off the square near the Electric Coop), has been wondering about how much to gouge, I mean charge, the good tourists who visit Prescott for her rent-by-the-hour bikes. She has been experimenting with the amount of advertising she does in the Prescott Daily Disappointment , and has been varying the rental price of her bikes to see what the result would be in the total number of bikes rented. Over the past 10 weeks she has found the following.

Now she needs your help in figuring out just how much she should optionally rent her bikes for and how much advertising she should do in the Disappointment .

Here are the rules for this regression:

1. Dependent variable = bikes rented per week.
2. Write out the hypotheses for this regression analysis.
3. Conduct a regression analysis and show the impact of price and advertising on the number of bikes rented.
4. Reach a decision for each null hypothesis, and calculate the F-value for the regression.
5. Predict the number of bikes that will be rented if she spent $45 0 in advertising ( Watch this variable carefully! ) with a rental price of $8.9 9 per hour.
6. In your opinion, what is the optimal price for Carol to rent her bikes for per hour and optimally how much should she spend on advertising ?

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document