# Linear Regression and Correlation Analysis

The editor wants to examine the relationship between the price of the vehicle and the horespower of the engine [see the attached file for the data].

a. (1) Develop a scatter plot for these data

(2) Discuss what the plot implies about the relatinship between the two variables.

Use price as the dependent (y) variable.

b. Compute the correlation coefficient for the two variables.

c. Compute the linear regression equation based on the sample data.

d. Toyota's 1999 Camry four-cylinder model generates 133 horsepower. Provide an estimate of the price of the 1999 Camary. Touota's suggested retail price for the Camry LE 4A model was $20.278. Calculate the appropriate residual for this model of Camry.

e. (1) Compute the R-squared value and discuss what this value means.

(2) At a significance level of 0.01, can you conclude that engine horespower is a good predictor of the price of an automobile?

https://brainmass.com/statistics/regression-analysis/linear-regression-and-correlation-analysis-143753

#### Solution Preview

The editor wants to examine the relationship between price of the vehicle and the horsepower of the engine.

a (1) Develop a scatter plot for these data

Horsepower will be our independent (x) variable and price will be our dependent (y) variable.

(2) Discuss what the plot implies about the relationship between the two variables.

Use price as the dependent (y) variable.

As horsepower increases, the price also increases.

b Compute the correlation coefficient for the two variables.

The correlation coefficient is r = 0.766.

c. Compute the linear regression equation based on the sample data.

The equation is (price) ...

#### Solution Summary

Linear regression and correlation analysis is examined. The expert develops a scatter plot for the data.