The two variable: Price = amount spent by a customer on a new automobile at a ca
ID: 3132731 • Letter: T
Question
The two variable: Price = amount spent by a customer on a new automobile at a car dealership and Income = reported annual household income on a credit application when buying the car. For n = 100 purchases, the average Income is $60,359 and average Price is $ 19,522. A newspaper article conjectured a relationship: amount paid for a new car is about one-third of annual household income. Equation is:
The regression fit from excel is:
Price (Income) = 5787.9 + 0.2275*Income
E 1500 inimize 20000 60000 80000100000 t squares ost Income Income Price 0.676 Price test of significance of correalition tcalc = 9.076 tcrit= 1.98 pvalue = 1.23E-14 n= 100 SUMMARY OUTPUT Regression Statistics 0.676 Multiple R R Square Adjusted R Square Standard Error Observations 0.457 0.451 4266.858 100 ANOVA Significance F 82.37 1.2QE-14 Regression Residual SS MS 1 1499656197.5 1499656198 98 1784195402.5 18206075.5 99 3283851600.0 Total Intercept Income Stat P-value Lower 95% Upper 95% Coefficients Standard Eort 2667.80 8908.00 1572.26 5787.90 3.68 0.00037979 O. 1780 9.076 1.23E-14 0.228 0.025Explanation / Answer
Regression fit from excel is better because this uses the Method of Least Squares to determine the best fit line to data.
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