A survey of prices for external disk drives found the accompanying data, where 1

Question

A survey of prices for external disk drives found the accompanying data, where 1 TB = 1000 gigabytes. Some research on the prices discovered that the 170 GB hard drive was a special "hardened" drive designed to resist physical shocks. Because it is completely different from the other drives, it was removed from the data. The correlation is now 0.998 and other summary statistics are shown in the accompanying popup window. Complete parts a and b. If a drive has a capacity of 3.2264 TB (or 2 SD above the mean of 0.963 TB), how many standard deviations above or below the mean price of $125.53 do you expect the drive to cost? The expected cost is standard deviations the mean price. (Type an integer or decimal rounded to three decimal places as needed.)

Explanation / Answer

1. Compute, slope, beta1 using the given information.

beta1=r*sdy/sdx

=0.998*127.50/1.1317

=112.43

beta0=ybar-beta1*xbar

=125.53-112.43*0.963

=17.25991

Therefore regression equation is:

yhat=17.25991+112.43x

Now substitute, x with 3.2264 to compute expected price.

Price=$380.004

The expected price, $380.004 is 1 standard deviation above the mean.

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