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	12	10.3
2	10	9.2
3	15	4.6
4	18	4.2
5	12	5.1
6	10	11.6
7	12	8.0
8	16	7.8
9	14	7.8
10	18	4.3
11	8	10.0
12	8	8.8

a) Determine the regression equation

a=
b=

b) Estimate the selling price of a 13-year-old car (in $000)

c) Interpret the regression equation (in dollars).

Answer 1

a)

X	Y	X⋅Y	X⋅X
12	10.3	123.6	144
10	9.2	92	100
15	4.6	69	225
18	4.2	75.6	324
12	5.1	61.2	144
10	11.6	116	100
12	8	96	144
16	7.8	124.8	256
14	7.8	109.2	196
18	4.3	77.4	324
8	10	80	64
8	8.8	70.4	64

a = 14.667

b = - 0 .551

b) x = 13

y = 14.667 - 0.551 ( 13 )

= 7.504

c) Slope : each additional year, selling price decreased by 0.551

Intercept : selling price is 14,667 at 0^th year .