Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual revenue. In 2011 Hertz had 320,000 cars in service and annual revenue of approximately $4.2 billion. The following data show the number of cars in service (1000s) and the annual revenue ($ millions) for six smaller car rental companies (Auto Rental Newswebsite, August 7, 2012).

Company Cars (1000s) Revenue ($ millions)

U-Save Auto Rental System, Inc. 11.5 118

Payless Car Rental System, Inc. 10.0 135

ACE Rent A Car 9.0 100

Rent-A-Wreck of America 5.5 37

Triangle Rent-A-Car 4.2 40

Affordable/Sensible 3.3 32

1. Develop a scatter diagram with the number of cars in service as the independent variable.
2. What does the scatter diagram developed inpart (a)indicate about the relationship between the two variables?
3. Use the least squares method to develop the estimated regression equation.
4. For every additional car placed in service, estimate how much annual revenue will change.
5. Fox Rent A Car has 11,000 cars in service. Use the estimated regression equation developed inpart (c)to predict annual revenue for Fox Rent A Car.