For years, import cars have held an advantage over domestic automobiles according to data collected by J.D. Power and Associates, which generates a widely respected report on initial quality. The 2015 data are in the file PP100. Initial quality is measured by the number of problems per 100 vehicles (PP100).

(Source: J.D. Power, “Korean brands lead industry in initial quality, while Japanese brands struggle to keep up with pace of improvement,” www.jdpower.com, June 17, 2015.)

a. Produce a regression equation to predict PP100 for vehicles in the model yi = b0 + b1x1 + b2x2 + e where x1 = 1 if considered an Asian brand and 0 if not and x2 = 1 if considered a European car and 0 if not.

b. Interpret the parameters b0, b1, and b2 in the model given in part a.

c. Conduct a test of hypothesis to determine if the regression model developed in part a is statistically significant. Test using an alpha = 0.05.