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Assignment 3.1

The document describes a dataset containing information on over 800 used cars, including variables like price, mileage, manufacturer, model, features, etc. It provides instructions to perform simple and multiple regression analyses on the data. For the simple regression of price on mileage, the results show that price decreases by about $0.17 for each additional mile. Mileage explains only 2% of the variation in price. The stepwise multiple regression retains 6 variables - cylinder, cruise, leather, mileage, doors, sound - in predicting price. Together these explain about 44% of the price variation. The variable liter is excluded since its p-value is above 0.05. When log-transformed price is used as

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Assignment 3.1

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Assignment 3: Multiple Regression

This data set consists of a sample of over eight hundred used cars in this country. The retail price of
these cars was calculated from the tables provided by the association of car manufacturer. You are
provided with a data set containing the following variables:

Price: suggested retail price of the used car in excellent condition. The condition of a car can
greatly affect price. All cars in this data set were less than one year old when priced and
considered to be in excellent condition.
Mileage: number of miles the car has been driven
Make: manufacturer of the car.
Model: specific models for each car manufacturer.
Trim (of car): specific type of car model such as SE Sedan 4D, Quad Coupe 2D
Type: body type such as sedan, coupe, etc.
Cylinder: number of cylinders in the engine
Liter: a more specific measure of engine size
Doors: number of doors
Cruise: indicator variable representing whether the car has cruise control (1 = cruise)
Sound: indicator variable representing whether the car has upgraded speakers (1 = upgraded)
Leather: indicator variable representing whether the car has leather seats (1 = leather)

Perform the following tasks on this data set:

Use simple linear regression to explore the intuitive relationship between miles traveled
and retail price.
From the simple regression results, answer the following questions:
a. In general, what happens to price when there is one more mile on the car?
b. Does mileage help you predict price? What does the p-value tell you?
c. Does mileage help you predict price? What does the R-Sq value tell you?
Answers

Variables Entered/Removeda

Model

Variables

Entered

Removed

Mileageb

Method
. Enter

a. Dependent Variable: Price

b. All requested variables entered.
Coefficientsa
Standardized
Unstandardized Coefficients
Model
1

B
(Constant)

Std. Error

24764.559

904.363

-.173

.042

Mileage

Coefficients
Beta

-.143

Sig.

27.383

.000

-4.093

.000

a. Dependent Variable: Price

a. The price will be reduced by 1.73 cents with each added mile on the car.

Coefficientsa
Standardized
Unstandardized Coefficients
Model
1

B
(Constant)

Std. Error

24764.559

904.363

-.173

.042

Mileage

Coefficients
Beta

-.143

Sig.

27.383

.000

-4.093

.000

a. Dependent Variable: Price

b. Yes.p-value explains that the relationship between mileage and price is negatively
significant corelated.
It is significant but in negative direction.
Model Summary

Model

R Square

.143a

Adjusted R

Std. Error of the

Square

Estimate

.020

.019

9789.288

a. Predictors: (Constant), Mileage

c. Yes. R-Sq(R2) is the correlation coefficient squared(.1432 = .020) referred to as the

coefficent of determination. This values indicates the percentage of total variation of
Y ( Price) explained by the regression model consisting of miles.
Only 2% can be influenced by mileage and the rest (98%) by other factors.

Taking price as the dependent variable, perform stepwise multiple regression on this
data set.
What is your final model? How many variable/variables was/were dropped from the
model. Explain why?
Variables Entered/Removeda

Model

Variables

Entered

Removed

Method
Stepwise
(Criteria:
Probability-of-F-

Cylinder