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A study was recently performed by the American Automobile Association in which it attempted to develop a regression model to explain variation in Environmental Protection Agency (EPA) mileage ratings of new cars. At one stage of the analysis, the estimate of the model took the following form:
Where:
a. Interpret the regression coefficient for variable x1.
b. Interpret the regression coefficient for variable x2.
c. Present an estimate of a model that would predict the average EPA mileage rating for an automobile with standard transmission as a function of the vehicle’s weight.
d. Cadillac’s STS-V with automatic transmission weighs approximately 3,973 pounds. Provide an estimate of the average highway mileage you would expect to obtain from this model.
e. Discuss the effect of a dummy variable being incorporated in a regression equation like this one. Use a graph if it is helpful. |
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