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3. Regression review II, problem 5 Aa Aa A car dealer wants to find the relationship between the odometer reading and the selling price of used Ford Tauri. A random sample of 100 Tauri is selected, and the data recorded. The necessary data are in this Excel® file (Note: Reload this file each time you go through this problem) You are asked to provide an interval estimate for the bidding price on a Ford Taurus with 40,000 miles on the odometer. The 95% prediction interval for the price of a single car with 40,000 miles is Now the dealer wants to bid on a lot of Ford Tauri, where each car has been driven 40,000 miles. The 95% confidence interval is

Explanation / Answer

price=y

odometer reading=x

Code in R:

lm used to fit linear regression of price on odometer

predict function is used to predict price

interval=predict gives prediction interval for 95% default

interval =confidene gives confidence interval for 95% default

dim(odometer2v1_1_)
attach(odometer2v1_1_)
reqlm.lm=lm(Price~Odometer)
newdata=data.frame(Odometer=40000)
coefficients(reqlm.lm)
predict(reqlm.lm,newdata,interval="predict")

output:

fit lwr upr

14584.56 14002.1 15167.03

predict(reqlm.lm,newdata,interval="confidence")

fit lwr upr
1 14584.56 14516.68 14652.45

ANSWRES:

the 95% prediction interval for the price of a single car with 40000 miles is

14002.1 and  15167.03

95% confidence interval is

14516.68 and 14652.45

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