Engineering

Economics & Management CEE 3230 Spring 2016

Crosslist as: ENGRG 3230, Credits: 3

Professor: Ricardo A Daziano

Due date: Friday February 19 by midnight.

Homework 1
Learning outcomes: Unit 1 (Chapter 2 Textbook) and Unit 2 (Chapter 3).

MyEngineeringLab. (50 points)
There are 5 questions in MyEngineeringLab that you need to answer online.

Problem 2. (50 points)
The file HW1drivingcosts.csv (posted on BlackBoard) has data for 100 drivers on Total Annual Cost of Driving
(including insurance, financial, maintenance, and per-mile costs), annual mileage, and whether the car was
bought in cash or not (an indicator variable equals 1 if the car was bought in cash). Use a linear regression to
determine
a) (10 pts) An estimate of the fixed cost of driving.
b) (10 pts) An estimate of the variable cost of driving
c) (10 pts) Can you provide an estimate of the financial cost of owning the car (i.e. an estimate of the
monthly payments if the car was bought with a loan)?
d) (10 pts) Is it possible to provide an estimate of the insurance costs?
e) (10 pts) Businesses refund mileage at an average of 0.54 $/miles. Compare the reimbursement rate
with your own estimate of the variable cost of driving and discuss.
For this problem, prepare a PDF with your responses. Prepare a zip file named
HW1_Prob2_FamilyName_netID with your PDF and the R code you used for estimating the cost model.
Email the zip file to mp723@cornell.edu.