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Novine knows that over the last 10 years average computer prices have fallen. She believes that average com- puter prices can be predicted by
Novine knows that over the last 10 years average computer prices have fallen. She believes that average com- puter prices can be predicted by time, computing speed (number of instructions processed per second), memory (RAM), storage (hard drive space), and processor chip price. avg. computer price 3,000 2,850 2,750 2,250 2,100 1,900 1,850 1,700 1,500 1,100 year 1990 1991 bits ram storage 2 4 1992 4 1993 8 1994 8 4 8 8 16 24 1995 16 32 1996 16 64 1997 32 64 40 80 80 100 200 500 500 1,000 1998 64 128 2,000 1999 64 128 4,000 chip price 870 800 790 700 500 450 400 375 350 300 a. Using Excel, develop a linear regression model for the average computer price using the variables above. b. Calculate the MAD for your model. c. Calculate R, F, and t statistics and interpret them. d. What is the best regression model to use to predict average computer price? Is there a problem with using linear regression on this data?
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