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Question: An auto manufacturing company wanted to investigate how the price of one of its car models depreciates with age. The research department at the company took a sample of eight cars of this model and collected the following information on the ages (in years) and prices (in hundreds of dollars) of these cars.
a. Construct a scatter diagram for these data. Does the scatter diagram exhibit a linear relationship between ages and prices of cars?
b. Find the regression line with price as a dependent variable and age as an independent variable.
c. Give a brief interpretation of the values of a and b calculated in part b.
d. Plot the regression line on the scatter diagram of part a and show the errors by drawing vertical lines between scatter points and the regression line.
e. Predict the price of a 7-year-old car of this model.
f. Estimate the price of an 18-year-old car of this model. Comment on this finding.
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