Question

Why might using this regression for a price of 90 be doubted or criticized?

a. Extrapolation from existing prices is somewhat suspect b. $90 is outside of the known range of prices.c. The error is likely to be larger than the standard error of estimate.d. All of the above are true.

Q	P
46.998	76.5
37.223	83.83
52.443	70.52
62.765	71.78
61.984	71.95
67.331	63.51
28.164	86.05
47.658	75.33
60.95	69.18
39.133	78.16
43.098	81.47
33.096	85.23
31.531	86.01
40.224	81.54
42.265	80.12
28.821	84.35
44.321	74.99
45.96	77.14
51.349	75.73
46.345	75.41
46.73	72.5
46.298	75.13
63.426	65.18
49.147	79.24
48.138	74
44.868	80.65
69.722	65.68
58.657	75.26
73.757	61.34
43.451	78.47
66.615	64.95
33.876	86.53
55.389	71.9
59.022	70.27
69.189	65.44
49.155	73.12
44.762	78.64
56.751	76.27
46.187	78.21
57.576	68.65
35.558	79.64
41.528	79.97
34.784	83.48
46.371	75.7
49.675	76.92
50.281	73
46.773	76.86
71.945	65.22
32.575	84.91
42.635	78.31
24.224	89.92
64.477	68.33
37.202	84.74
43.464	77.69
57.577	68.53
54.667	71.83
58.746	73.26
55.957	72.52
36.282	83.73
38.843	79.24
56.94	68.89
53.226	72.79
40.602	76.42
47.591	80.14
51.315	73.26
55.578	75.34
51.387	70.87
40.89	79.81

Answer 1

In the given problem, we find that using regression analysis, the value of Q, for Price(P) = 90 is 26.8098.

We might suspect this value as a) Extrapolation from existing prices is somewhat suspicious.

Justification: Extrapolations are dubious since they require the additional and questionable assumption that the relation between the explanatory and the response variable doesn't change even at the extreme values of the explanatory variable. Here, since 90 lies beyond the range of prices, hence, extrapolation will lead to a dubious answer, which cannot be fully relied on.