Posted by Rey on .
You have been hired by a local used car dealer to help in their pricing of used cars. (Hey, it’s temporary thing, just to help you earn some extra cash.) They want to know whether the prices of the cars they sell are more influenced by the age of the car or by the mileage on the car. (Obviously, on average, an older car has more miles on it than a newer car, but the relationship is not perfect.)
Using the data found in the Excel file, following the same steps outlined in the Lecture, run two separate regressions (one utilizing age of the car, one utilizing mileage on the car) and obtain the results table similar to the one contained in the Lecture OR similar to the one in your text found on page 127.
Interpret, in plain English, what the estimated coefficients mean for each of these regressions.
Then interpret what the R Squares mean as well. Which of the two variables, age or mileage, is a better predictor of what a car will sell for? Why?