Auction Auction Price Age of Item Number Bidders

1 $946 113 9
2 $1,336 126 10
3 $744 115 7 18. An antique collecto
4 $1,979 182 11 item increases with its
5 $1,522 150 9 file P10_18.xlsx contai
6 $1,235 127 13
7 $1,483 159 9
auctioned comparable
8 $1,152 117 13 a. Estimate a multiple r
9 $1,545 175 8 each of the estimated
10 $1,262 168 7 correct in believing tha
11 $845 127 7
12 $1,055 108 14
age and with the numb
13 $1,253 132 10 b. Interpret the standa
14 $1,297 137 9 predictions of price fro
15 $1,147 137 8
16 $1,080 115 12
17 $1,550 182 8
18 $1,047 156 6
19 $1,792 179 9
20 $729 108 6
21 $854 143 6
22 $1,593 187 8
23 $1,175 111 15
24 $1,713 137 15
25 $1,356 194 5
26 $1,822 156 12
27 $1,884 162 11
28 $1,024 117 11
29 $2,131 170 14
30 $785 111 7
31 $1,092 153 6
32 $2,041 184 10
8. An antique collector believes that the price received for a particular
em increases with its age and with the number of bidders. The
le P10_18.xlsx contains data on these three variables for 32 recently
uctioned comparable items.
. Estimate a multiple regression equation using the given data. Interpret
ach of the estimated regression coefficients. Is the antique collector
orrect in believing that the price received for the item increases with its
ge and with the number of bidders?
. Interpret the standard error of estimate se and R2. Does it appear that
redictions of price from this equation will be very accurate?
rticular

cently

Interpret
ector
s with its

ear that
 StatTools (Core Analysis Pack)
Analysis: Scatterplot
Performed By: Chris Albright
Date: Sunday, June 06, 2010
Updating: Live

Scatterplot of Auction Price vs Age of Item of Data Set #1

2500

2000
Auction Price / Data Set #1

1500

1000

500

0
100 110 120 130 140 150 160 170 180 190 200
Age of Item / Data Set #1

Correlation 0.730

Scatterplot of Auction Price vs Number Bidders of Data Set #1

2500

2000
Auction Price / Data Set #1

1500

1000

500

0
4 6 8 10 12 14 16
Number Bidders / Data Set #1

Correlation 0.395
 StatTools (Core Analysis Pack)
Analysis: Regression
Performed By: Chris Albright
Date: Sunday, June 06, 2010
Updating: Static

Multiple Adjusted StErr of

R-Square
Summary R R-Square Estimate
0.9448 0.8927 0.8853 133.137

Degrees of Sum of Mean of

F-Ratio p-Value
ANOVA Table Freedom Squares Squares
Explained 2 4277159.7034 2138579.8517 120.6511 < 0.0001
Unexplained 29 514034.51534 17725.328115

Standard Confidence Interval 95%

Coefficient t-Value p-Value
Regression Table Error Lower Upper
Constant -1336.722 173.35612607 -7.7108 < 0.0001 -1691.2751398 -982.16896446
Age of Item 12.736 0.9023804868 14.1140 < 0.0001 10.890623521 14.581774161
Number Bidders 85.815 8.7057568147 9.8573 < 0.0001 68.00986071 103.6204045

Part a:
Part a: The
The estimated
estimated multiple
multiple regression
regression equation
equation isis Auction
Auction Price
Price== -1337
-1337++ 12.736
12.736Age
Age++
85.815 Number
85.815 Number of of Bidders.
Bidders. Holding
Holdingall
all else
else constant,
constant, wewehave
have the
thefollowing
following interpretations:
interpretations: AsAs
the age
the age of
of the
theitem
item increases
increases by
by one
oneyear,
year, the
the auction
auction price
pricetypically
typicallyincreases
increases byby$12.74.
$12.74. AsAs the
the
number of
number of bidders
bidders increases
increasesby byone,
one, the
theauction
auctionprice
price typically
typically increases
increases by
by $85.82.
$85.82.Thus,
Thus, the
the
antiquecollector
antique collector isis correct
correctininbelieving
believing that
that the
theprice
price received
received for
for an
anitem
item increases
increaseswith
with its
its age
age
andwith
and with the
the number
number of of bidders.
bidders.

Part b:
Part b: The
The R-square
R-square value
valueindicates
indicates that
that about
about 89%89% of of the
the variation
variation inin the
the auction
auction price
priceisis
explained by this multiple regression model. The standard error of estimate
explained by this multiple regression model. The standard error of estimate is a measure of is a measure of the
the
predictionerror
prediction error we
weareare likely
likelytoto make
make when
whenwe we use
use this
this estimated
estimated regression
regression equation
equation to
to predict
predict
the auction
the auction price
price for
for an
an item.
item. About
About 2/3
2/3 of
of all
all predictions
predictions should
should be be within
within about
about $133
$133ofof the
the
actual price received for an
actual price received for an item. item.
Se indicates
Se indicates the
thetypical
typical magnitude
magnitude of of error
error when
when usingusing age
age of
of item
itemand
and number
number of of bidders
bidders to to
predict the
predict theauction
auction price.
price. The
Thesmall
small the
theValue
Valueis,is, the
the better
better our
our model
model is.is. More
Morespecifically,
specifically,
abouttwo-thirds
about two-thirds of of the
the predictions
predictionswill
will be
bewithin
within $133.14
$133.14 of of the
the actual
actual auction
auction price
pricevalues
values andand
about 95% of the predictions will be within two standard errors, or $266.28,
about 95% of the predictions will be within two standard errors, or $266.28, of the actual of the actual
auctionprice
auction price values.
values.
 Need to "interpret each of the estimated regression coefficients"

Holding all else constant, we have the following interpretations: As the age of
the item increases by one year, the auction price typically increases by $12.74.
As the number of bidders increases by one, the auction price typically increases
by $85.82. Thus, the antique collector is correct in believing that the price
received for an item increases with its age and with the number of bidders.

36Age
36 Age++
pretations:
retations: AsAs
$12.74. As
$12.74. As the
the
2.Thus,
2. Thus, the
the
es with its
s with its age
age
When interpret one of the slopes for multiple regression model, you need to mention: "Holding all else constant

priceisis
price
easure
easure of of the
the
ation to predict
tion to predict
$133of
$133 of the
the
bidders to
bidders to
ecifically,
ecifically,
ice values and
ce values and
e actual
actual
e age of
$12.74.
increases
rice
dders.

n: "Holding all else constant, "