1. An auto manufacturing company wanted to investigate how the price of one of it’s car models depreciate with age. The research department of the company took a sample of eight carsof this model and collected the following information on the ages (in years) and prices (in hundreds of dollars) of these cars.
Ages 8 3 6 9 2 5 6 2
Price 38 220 95 33 267 134 112 245
a) Construct a scatter diagram for these data. Does the scatter diagram exhibit a linear relationship between ages and prices of cars?
b) Find the regression line with price as the dependent variable and age as an independent variable.
c) Give a brief interpretation of the values of a and b as calculated in part (b)
d) Plot the regression line on the scatter diagram and show the errors by drawing vertical lines between the scatter points and the regression line.
e) Predict the price of a 7 year-old car of this model
f) Estimate the price of a 18 year old car and comment on your findings.