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 ages (in years) and prices (in hundreds of dollars) of these cars.
|
Age (x)
|
8
|
3
|
6
|
9
|
2
|
5
|
6
|
3
|
|
Price (y)
|
16
|
74
|
40
|
19
|
124
|
36
|
33
|
89
|
a) Set up a scatter diagram for age and price.
b) At the 0.05 level of significance, determine whether there is a significant linear relationship between age and price.
c) State the linear regression equation.
d) Predict the average price obtained when the age of the car is 7 years old.
e) Determine the coefficient of determination, r2, and interpret its meaning.
f) How useful do you think this regression model is for predicting price?