Question

The owner of Maumee Ford-Volvo wants to study the relationship between the age of a car and its selling price. Listed below is a random sample of 12 used cars sold at the dealership during the last year.

Car				Age (years)				Selling Price ($000)
	1				11				12.2
	2				8				11.0
	3				16				4.9
	4				18				4.1
	5				9				6.7
	6				8				13.6
	7				10				11.1
	8				16				9.0
	9				14				9.0
	10				18				4.2
	11				6				12.1
	12				6				10.4

  Click here for the Excel Data File

1. Determine the regression equation. (Negative values should be indicated by a minus sign. Round your answers to 3 decimal places.)

2. Estimate the selling price of an 7-year-old car (in $000). (Round your answer to 3 decimal places.)

3. Interpret the regression equation (in dollars). (Round your answer to the nearest dollar amount.)

Answer 1

Sol:

The regression equation is: .

(a).

y = 14.909 – 0.451 r

a = 14.909
b = -0.451

(b).

esimated selling price = 14.909 - (0.451 * 11) = 9.949.

(c) .

For each additional year, the car decreases 451 in value.
(Calculation = 0.451 * 1000 = 451.)

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