13.11 Used cars The following data (also available from the book’s website) is from a random sample of campus newspaper ads on used cars for sale. Consider the age and horsepower (HP) of a car to predict its selling price.

(The variable Type stands for whether the car is from the United States, coded as 1, or a foreign car, coded as 0.

This variable will be considered in Exercise 13.48.)

a. Construct a scatterplot matrix (or separate scatterplots)

to investigate the relationship among price, age, and horsepower and interpret.

b. Find the multiple regression prediction equation for the selling price in terms of age and horsepower of a car. What is the predicted price for a car that has a horsepower of 80 and (i) is 8 years old, (ii) 10 years old, rounded to the nearest hundred?

c. Based on this multiple regression, can you predict the price difference between a car with 60 HP and a car with 80 HP without knowing the ages of the two cars?

Explain.

Transcribed Image Text:

Car Price Age HP Type Car Price Age HP Type 1 8700 9 55 1 11 5050 10 44 1 2 11200 7 75 1 12 14800 7 75 0 3 9000 9 69 0 13 1800 12 55 1 4 10300 10 76 0 14 7200 10 82 1 5 10500 8 76 0 15 8600 9 73 1 6 5250 12 49 1 16 13000 9 130 0 7 12000 5 120 0 17 11790 8 95 0 8 2500 11 79 1 18 12350 7 124 0 9 8300 8 90 0 19 6100 10 74 1 10 9300 8 38 0