The Toyota Camry is one of the best-selling cars in North America. The cost of a

Question

The Toyota Camry is one of the best-selling cars in North America. The cost of a previously owned Camry depends on many factors, including the model year, mileage, and condition. To investigate the relationship between the car’s mileage and the sales price for Camrys, the following data show the mileage and sale price for 19 sales (PriceHub web site, February 24, 2012).

Solve the blanks: For the model estimated “Y=16.4697 + (-0.0587)x” , calculate the predicted price and residual for each automobile in the data. Identify the two automobiles that were the biggest bargains. If required, round your answer to the nearest whole number.

The best bargain is the Camry #.........in the data set, which has……..miles, and sells for $............less than its predicted price.

The second best bargain is the Camry #........in the data set, which has……..miles, and sells for $........less than its predicted price.

Suppose that you are considering purchasing a previously owned Camry that has been driven 80,000 miles. Use the estimated regression equation mentioned above to predict the price for this car. If required, round your answer to one decimal place. Do not round intermediate calculations.

Predicted price: $...........

Miles (1,000s) Price ($1,000s) 22 16.2 29 16.0 36 13.8 47 11.5 63 12.5 77 12.9 73 11.2 87 13.0 92 11.8 101 10.8 110 8.3 28 12.5 59 11.1 68 15.0 68 12.2 91 13.0 42 15.6 65 12.7 110 8.3

Explanation / Answer

Sol:

there exists a negative relationship between price and miles

as miles travelled increases,price decreases and vice versa

Linear regression in excel

Regression eq is

price=16.46976-0.05877*miles

For the question

calculate the predicted price and residual for each automobile in the data.

ANSWER is

bargain means less price

The best bargain is the Camry #.........in the data set, which has……..miles, and sells for $............less than its predicted price.

110000 miles and sells for -266 less than predicted

The second best bargain is the Camry #........in the data set, which has……..miles, and sells for $........less than its predicted price.

101000 and sells for $...1705.....less than its predicted price.

Suppose that you are considering purchasing a previously owned Camry that has been driven 80,000 miles. Use the estimated regression equation mentioned above to predict the price for this car. If required, round your answer to one decimal place. Do not round intermediate calculations.

Predicted price: $.....

price=16.46976-0.05877*miles

=6.46976-0.05877*80

= 1.76816

= 1.76816*1000

=1768.16

=1768.2

Predicted price=1768.2

SUMMARY OUTPUT Regression Statistics Multiple R 0.733933 R Square 0.538657 Adjusted R Square 0.51152 Standard Error 1.541377 Observations 19 ANOVA df SS MS F Significance F Regression 1 47.15804 47.15804 19.84897 0.000348 Residual 17 40.38933 2.375843 Total 18 87.54737 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 16.46976 0.948764 17.35917 2.99E-12 14.46804 18.47147 Miles -0.05877 0.013192 -4.45522 0.000348 -0.08661 -0.03094

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