Use Table 10.2’s 2009 prices of 2005 Camry LE sedans in excellent condition to estimate the equation P = α+β₁D+β₂M +β₃DM +ε, where P = price, M = mileage, and D = 0 if the car has a five-speed manual transmission, D = 1 if it has an automatic transmission.

a. Which of the estimated coefficients are statistically significant at the 5 percent level?

b. Are the signs and magnitudes of all the estimated coefficients plausible and substantial?

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Table 10.2: Exercise 10.8 Price ($) Miles Transmission Price ($) Miles Transmission 11,500 10,000 Automatic 10,200 47,000 Manual 9,000 68,000 Automatic 9,000 100,000 Automatic 11,000 18,000 Manual 12,200 14,000 Manual 7,500 110,000 Automatic 9,990 72,000 Manual 7,000 125,000 Manual 13,500 12,000 Automatic 7,200 120,000 Manual 11,400 56,000 Automatic