Question

Solve the problem. What is the relationship between diamond price and carat size? 307 diamonds were sampled and a straight-line relationship was hypothesized between y = diamond price in dollars) and x = size of the diamond (in carats). The simple linear regression for the analysis is shown below: Least Squares Linear Regression of PRICE Predictor Variables Constant Size Coefficient -2298.36 11598.9 Std Error T P 158.531 -14.50 0.0000 230.111 50.41 0.0000 R-Squared 0.8925 Adjusted R-Squared Resid. Mean Square (MSE) 0.8922 Standard Deviation 1248950 1117.56 Interpret the estimated slope of the regression line. For every $1 decrease in the price of the diamond, we estimate that the size of the diamond will increase by 11,598.9 carats. For every 1-carat increase in the size of a diamond, we estimate that the price of the diamond will decrease by $2298.36. For every 1-carat increase in the size of a diamond, we estimate that the price of the diamond will increase by $11,598.90. For every 2298.36-carat decrease in the size of a diamond, we estimate that the price of the diamond will increase by $11,598.90.

Answer 1

The correct interpretation of slope is:

For every 1-carat increase in the size of a diamond, we estimate that the price of the diamond will increase by $11,598.90.

Option C is correct.