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Lecture 25

Department

StatisticsCourse Code

STAT 101Professor

Richard WatermanLecture

25This

**preview**shows half of the first page. to view the full**3 pages of the document.**Stat 101 - Introduction to Business Statistics - Lecture 25: Curvature

Diminishing Returns to Scale

● A liquor store company wants to maximize its sales. It has a new wine to sell. It has an

alternative product available that will guarantee $50 per linear shelf foot.

● How many feet of the new wine should it put out for sale?

● A linear fit doesn’t do a very good job

○

○ A curve captures the curvature in the data

■

● Plotted on a log(x) against y scale we see the straight line that was fit by the method of

least squares

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