Megan, from Exercise 8, decides to get more information about the cars she researched. The table has prices and mileages for the same used car. In addition to the statistics she has learned in this chapter, Megan decides to use her linear regression skills from Chapter 2 to see if there is a relationship between the prices and the mileage. She hopes to use this knowledge to negotiate with sellers.
Mileage, xPrice, y
21,000 .........................$22,000
30,000 .........................$19,000
40,000 .........................$18,000
51,000 .........................$16,700
55,000 .........................$15,900
a. Enter the data into your calculator. Find the regression equation. Round to the nearest hundredth.
b. Find the correlation coefficient r. Round to three decimal places.
c. Is the regression equation a good predictor of price, given the mileage? Explain.
d. The car Megan is considering has 60,000 miles on it and the price is $19,000. Discuss her negotiating strategy. Explain on what grounds she should try to get a lower price.