An auto dealer claims that the resale value P of a 2005 Toyota Camry LE sedan depends on the number of miles M that it has been driven and whether it has an automatic or five-speed manual transmission. Market prices are used to estimate this equation, using the variable D = 0 if manual, D = 1 if automatic:

Interpret each of the parameters α, β₁, β₂, and β₃. What advantages does a regression model have over a simple comparison of the average resale values of manual and automatic Camrys?

Transcribed Image Text:

Pa+BD+BM + 3DM +