The Toyota Camry is one of the best-selling cars in North America. The cost of a previously owned Camry depends upon many factors, including the model year, mileage, and condition. To investigate the relationship between the car’s mileage and the sales price for a 2007 model year Camry, the following data show the mileage and sale price for 19 sales (PriceHub website, February 24, 2012).
Miles (1000s) Price ($1,000s)
22 ............. 16.2
29 ............. 16.0
36 ............. 13.8
47 ............. 11.5
63 ............. 12.5
77 ............. 12.9
73 ............. 11.2
87 ............. 13.0
92 ............. 11.8
101 ............ 10.8
110 ............ 8.3
28 ............. 12.5
59 ............. 11.1
68 ............. 15.0
68 ............. 12.2
91 ............. 13.0
42 ............. 15.6
65 ............. 12.7
110 ............ 8.3
a. Develop a scatter diagram with the car mileage on the horizontal axis and the price on the vertical axis.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Develop the estimated regression equation that could be used to predict the price ($1,000s) given the miles (1000s).
d. Test for a significant relationship at the .05 level of significance.
e. Did the estimated regression equation provide a good fit? Explain.
f. Provide an interpretation for the slope of the estimated regression equation.
g. Suppose that you are considering purchasing a previously owned 2007 Camry that has been driven 60,000 miles. Using the estimated regression equation developed in part (c), predict the price for this car. Is this the price you would offer the seller?