Many factors affect the price of wine, including such qualitative characteristics as the variety of grape, location of winery, and label. Researchers developed a regression model considering two quantitative variables: the tasting score of the wine and the age of the wine (in years) when released to market. They found the following regression equation, with an R2 of 65%, to predict the price (in dollars) of a bottle of wine.
Price = 6.25 + 1.22 Tasting Score + 0.55 Age
One of the following interpretations is correct. Which is it? Explain what’s wrong with the others.
a) Each year a bottle of wine ages, its price increases about $.55.
b) This model fits 65% of the points exactly.
c) For a unit increase in tasting score, the price of a bottle of wine increases about $1.22.
d) After allowing for the age of a bottle of wine, a wine with a one unit higher tasting score can be expected to cost about $1.22 more.