HW 17 Key

21:37 Diamond Rings. This data table contains the listed prices and weights of the diamonds in 48 rings offered for sale in The Singapore Times. The prices are in Singapore dollars, with the weights in carats. Formulate the regression model with price as the response variable and weight as the explanatory variable.

21:37 a a.Could these data be a sample from a population in which the population intercept is zero? Should B0=0? No. B0 should not be 0. The intercept of -260 is significantly different from 0, very much so p<.0001

21:37 b b. Is $800 an unusually high price for a ring with a diamond that weighs.25 carats? Yes, it is more than 2 standard errors away from the predicted value. 800 is outside of the 95% confidence interval.

21:40 Production Costs.

21:40 a a. Does material cost per unit explain statistically significant variation in the average cost? Yes, statistically significant.

21:40 b b. Effect of reduction from materials costing $2 per unit to $1.60 per unit.

21:40 c c. Qualms about presenting the 95% confidence interval. Low r^2 Residuals aren’t great

21:41 Seattle Homes.

21:41 a a. 95% confidence interval for fixed cost b1 estimates fixed costs from -$13,000 to $129,000. Fixed costs might be 0, negative, or considerably positive.

21:41 b b. 95% confidence interval for the marginal costs b0 estimates marginal costs from 111 to 201 $/sq ft. Ignore other characteristics.

21:41 c c. How much might a buyer pay, per sq ft, for a specific home with 3,000 sq ft? Give a range. Use +- 2 se to set the range: 90 to 260 $/sq ft.

21:41 d d. How much in total might a buyer pay for a 3,000 sq ft home? Give a range. $280,000 to $770,000