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Lecture 25

STAT 101 Lecture 25: CurvaturePremium

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STAT 101
Richard Waterman

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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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