(Regression software required; instructor-provided spreadsheet recommended.) An analyst was asked to predict the gross social benefits of building a public swimming pool in Dryville, which has a population of 70,230 people and a median household income of $31,500. The analyst identified 24 towns in the region that already had public swimming pools. He conducted a telephone interview with the recreation department in each town to find out what fee it charged per visit (Fee) and how many visits it had during the most recent summer season (Visits). In addition, he was able to find each town’s population (Pop) and median household income (Income) in the most recent census. His data are as follows:

a. Show how the analyst could use these data to predict the gross benefits of opening a public swimming pool in Dryville and allowing free admission.

b. Predict gross benefits if admission is set at $1.00 and Dryville has marginal excess tax burden of 0.25. In answering this question, assume that the fees are used to reduce taxes that would otherwise have to be collected from the citizens of Dryville to pay for expenses incurred in operating the pool.