The owner of Maumee Ford-Mercury-Volvo wants to study the relationship between t

Question

The owner of Maumee Ford-Mercury-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.

If we want to estimate selling price on the basis of the age of the car, which variable is the dependent variable and which is the independent variable?

Determine the correlation coefficient. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.)

Interpret the correlation coefficient. Does it surprise you that the correlation coefficient is negative? (Round your answer to nearest whole number.)

Car Age (years) Selling Price ($000) Car Age (years) Selling Price ($000) 1 9 8.1 7 8 7.6 2 7 6.0 8 11 8.0 3 11 3.6 9 10 8.0 4 12 4.0 10 12 6.0 5 8 5.0 11 6 8.6 6 7 10.0 12 6 8.0

Explanation / Answer

a) Independent-age of car; dependent-selling price

b) r=summation [(X-Xbar)(Y-Ybar)]/sqrt [Summation (X-Xbar)^2][Summation (Y-Ybar)^2]

=(-26.290728)/sqrt[54.918778*42.590328]

=-0.54

c) The negative sign indicates, with increasing age price decreases and the streangth of the association is moderate among price and age variables.

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