Develop statistical model to relate the two expenditure item

Reference no: EM131014606

For a levee system, the table below shows the observed annual preemptive expenditure (funds spent on preventive maintenance) and the after-the-fact expenditure costs (funds spent on repairing defects in the system). It is seen that the more the system owner spends on preemptive activities, the less the owner spends on after-the-fact activities. Develop and plot a statistical model to relate the two expenditure items. From the developed model, establish and plot the marginal effects model. If the system owner currently spends $55 per square foot of levee surface area on preventive maintenance annually, use your marginal effects model to determine the benefits of increasing the preventive maintenance expenditure by 15%.

Reference no: EM131014606

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