Problem 5-3.The owner of a car dealer store for Sport/GT cars in Tampa is target

Question

Problem 5-3.The owner of a car dealer store for Sport/GT cars in Tampa is targeting a very exclusive market of high speed upper scale Sport/GT customers with an offer of pre-owned vehicles. He knows from industry research that Customer rating satisfaction is driven by price and speed at ¼ mile. He hires you as a statistician to investigate how these characteristics affect customer rating (and therefore car sales).

The variable PreOwned =1 if a car is been previously owned, 0 otherwise.

The regression equation when the car is pre-owned is Coefficientsa Unstandardized Standardized Coefficients Coefficients Model t Sig. Std Beta Error (Constant) 1995.888 445.138 4.484 .003 2.619 034 1.207 267 1.918 09 SpeedQtrMile 15.748 6.012 916 Price 6.720 5.570 455 PreOwned -237.976 124.062 -471 a. Dependent Variable: Rating yhat- 1757.912 15.748X1-6.72X2 yhat- 1995.888 15.748X1-6.72X2 yhat- 1995.888 15.748X1-6.72X2-237.976X3

Explanation / Answer

When the car is pre owned, x3 = 1

Hence,

The regression equation will be:

yhat = 1995.888 + 15.748X1 - 6.720X2 - 237.976*1

yhat = 1757.912 + 15.724X1 - 6.72X2

Option A is correct.

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