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[Step-by-Step] Car dealers use the "Red Book" to help them determine the value of used cars that their customers trade in when purchasing new cars. The book,

Question: Car dealers use the "Red Book" to help them determine the value of used cars that their customers trade in when purchasing new cars. The book, which is published monthly, lists the trade in values for all basic models of cars. It provides alternative values for each car model according to its condition and optional features.

The values are determined on the basis of the average price paid at recent used-car auctions. The problem with the "Red Book" is it does not indicate the value determined by the odometer reading, despite the fact that a critical factor for used car buyers is how far the car has been driven.

To examine this issue, a used car dealer randomly selected 98 three-year-old Toyota Camry's that were sold at auction during the past month.

The dealer recorded the price in ($000's) and the number of kilometres in (000's) on the odometer.

The data is collected below:

Price ($000's) Odometer (000's)
14.6 37.4
14.1 44.8
14 45.8
15.6 30.9
15.6 31.7
14.7 34
14.5 45.9
15.7 19.1
15.1 40.1
14.8 40.2
15.2 32.4
14.7 43.5
15.6 32.7
15.6 34.5
15.3 38.1
14.6 35.2
16.4 21
14.6 37.7
14.6 41.4
15.7 24.5
15 35.8
14.7 48.6
15.4 24.2
14.3 38.8
14.5 45.6
15.6 28.7
14.4 36.7
15.1 32.5
14.1 39.1
14.2 45.3
14.8 34.4
13.6 44.3
15.4 32.1
14.9 34.6
15.1 38.4
15 32.2
15.7 26.6
14.6 33.5
14.5 41.8
14.8 36.7
14.6 37.5
15.7 25.6
15 40.1
14.9 31
14.4 42.2
14.2 37.4
15.4 34.4
15.6 30.6
15.1 25.7
14.2 39.2
16.3 21.5
14.4 42.5
14.3 38.4
14.3 40.5
15.5 26
13.9 46.3
14.5 34.8
15.5 27.4
14.3 47.9
15 35.6
14.5 42.5
14.5 43.8
14.3 43.5
14.5 34.3
14.6 41.4
15.5 31.6
15 36
15.4 29.1
14.8 35
14.2 41.4
15.3 30.2
14.3 47.2
16.1 24.5
15.4 21.2
15.1 35.5
15 28
14.4 38.1
14.5 42.3
14 49.2
14.7 33.4
14.1 37.8
15.2 36
14.8 36.2
14.6 34.2
14.5 33.2
14.4 45.8
14.9 36.2
15.1 36.5
14.7 31
14.3 38.6
14.8 33
14.6 37.1
14.3 42.6
15.1 31.4
14.6 38.2
15.5 31.5
14.7 39.2
14.3 36.4

The dealer wants to identify if there is a relationship between the number of kilometres a car has travelled and the value of the car.

  1. Prepare a scatter plot ( 2 marks)
  2. Determine the regression line and describe whether the relationship between km's travelled and value is strong (5 marks)
  3. Use the regression line to estimate the value of a Camry that has travelled \(50,000 \mathrm{~km}\) 's ( 2 marks)

Price: $2.99
Solution: The downloadable solution consists of 9 pages
Deliverable: Word Document


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