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 age (in years) and prices (in hundreds of dollars) of these cars:
Age
8
3
6
9
2
5
6
3
Price
18
94
50
21
145
42
36
99
(a) Estimate the regression equation .
(b) Interpret the value of b obtained in part (a).
(c) Estimate the price of a car which is 5 years old.
(d) Calculate the correlation coefficient between the age and price of the car. Subsequently, interpret its’ value.
(e) Determine the percentage of variation in the number of breakdowns which can be explained by the age of the car.
Answers
Answer:
age 9 and price is 145. okkk my answer is correct
Given : 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 age (in years) and prices (in hundreds of dollars) of these cars:
To Find : Draw Scatter plot
the regression equation using utility
price of a car which is 5 years old.
Value of R²
Solution:
Age Price
x y
8 18
3 94
6 50
9 21
2 145
5 42
6 36
3 99
Insert data in excel
Add trend line ( linear)
and display equation on chart
the regression equation is y = -16.62x + 150.4
Value of R² = 0.852
price of a car which is 5 years old.
=> y = y = -16.62(5) + 150.4 = 67.3
price of a car which is 5 years old is 67.3 hundred
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