CAR SHOWROOM

At a show room for cars many people expressed interest in two models of car, one standard
and one electric. The sales representative asked the people various questions about their car
preference, so he can go away and study the people’s preferences and then make them an
offer.
Both models of car come in three different colours, and seven different power options of the
motor.
The sales representative asked the people a) what their preferred colour of car was, b) their
preferred power of the motor in horsepower, and c) he politely asked them their age and if
they tend to be a fast driver.
The sales representative then made a note of whether the people were interested in the
standard or the electric car.
He asks you to check the data and determine if those interested in the standard or the electric
car (the independent variable) prefer different power of the motor (dependent variable). He
asks you to check whether this relationship is affected by how fast they like to drive (the
moderator).
He also tells you that from his experience, people who like colours of cars such as red, tend to
want more powerful motors, and younger people also tend to prefer more powerful motors.
Please do the following:
1. Create dummy variables, one for each possible colour of the car. Variable name
“CarColour”. Remember to follow the rules covered in class for creating dummy
variables for regression.

2. Run a moderation analysis using “CarConditions” as independent variable (the X),

“DV_PreferredHorsePower” as the dependent variable (the Y; higher values mean a
preference for higher horsepower), and “LikeDrivingFast” as moderator (the W;
higher values mean a preference for driving faster). Please also enter your dummy
variables and Age as covariates (control variables) into the model.

3. If you obtain a significant interaction investigate what it means by examining the

“Conditional effects at the focal predictors”, report these conditional effects (only for
the low and high moderator value; the middle one is not necessary) and produce a plot
of the interaction (as done in class).

4. Please interpret, in your own words what the conditional effects and the plot tell you.