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Posted by on Saturday, May 10, 2008 at 3:20pm.

Estimating a cost function, high-low method?
Reisen Travel offers helicopter service from suburban towns to john F. Kennedy Airport. Each of it's 10 helicopters makes between 1,000 and 2,000 round trips per year. The records indicate that a helicopter that has made 1,000 round trips has an average operating cost of $300, and one that has made 2,000 round trips has an average operating cost of $250.
1. Estimate the linear relationship y = a+bx, where y is the total annual operating cost of the helicopter and x is the number of round trips.
2. give examples of costs that would be included in a and b
3. if Reisen Travel expects each helicopter to make an aver 1,200 round trips in the comming year, what should its operating budget for the helicopter fleet be?

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