Question: An auto manufacturing company wanted to investigate how the price

An auto manufacturing company wanted to investigate how the price of one of its car models depreciates with age. The research department at the company took a sample of eight cars of this model and collected the following information on the ages (in years) and prices (in hundreds of dollars) of these cars.
a. Construct a scatter diagram for these data. Does the scatter diagram exhibit a linear relationship between ages and prices of cars?
b. Find the regression line with price as a dependent variable and age as an independent variable.
c. Give a brief interpretation of the values of a and b calculated in part b.
d. Plot the regression line on the scatter diagram of part a and show the errors by drawing vertical lines between scatter points and the regression line.
e. Predict the price of a 7-year-old car of this model.
f. Estimate the price of an 18-year-old car of this model. Comment on this finding.

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  • CreatedAugust 25, 2015
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