Question: For years, import cars have held an advantage over domestic automobiles according to data collected by J.D. Power and Associates, which generates a widely respected report on initial quality. The 2011 data showed a general decrease in quality due primarily to voice-activated electronic systems that didn't work as well as advertised. The data are contained in the file PP100. Initial quality is measured by the number of problems per 100 vehicles (PP100).
a. Produce a regression equation to predict the PP100 for vehicles in the model
y1 = β0 + β1x1 + β2x2 + ε
where x1 = 1 if considered an Asian brand and 0 if not and x2 = 1 if considered a European car and 0 if not.
b. Interpret the parameters b0, b1, and b2 in the model given in part a.
c. Conduct a test of hypothesis using the model in part a to determine if the average PP100 is the same for the three groups of companies.