Question:

Classified ads in the Australian offered several used Toyota Corollas for sale. Listed below are the ages of the cars and the advertised prices.

1. Make a scatter plot for these data.
2. Describe the association between age and price of a used Corolla. Do you think a linear model is appropriate?
3. Computer software says that R2 = 0.894. What is the correlation between age and price? Explain the meaning of R2 in this context.
4. Why doesn’t this model explain 100% of the variability in the price of a used Corolla?
5. Explain the meaning of the slope of the line, and the y-intercept of the line.
6. If you want to sell a 7-year-old Corolla, what price seems appropriate?
7. You have a chance to buy one of two cars. They are about the same age and appear to be in equally good condition. Would you rather buy the one with a positive residual or a negative residual? Explain.
8. You see a "For Sale" sign on a 10-year-old stating the asking price as $1500. What is the residual?
9. Would this regression model be useful in establishing a fair price for a 20-year-old car? Explain

(15 Marks)

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document