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    Non-linear regression

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    The following data are selling prices z of a certain make and model of used cars w years old: (see table below)

    a) Fit a curve of the form z = cd^w by means of the nonlinear sample regression equation z = cd^w. Hint: use logarithmic transformations.

    b) Is d significantly different from 1 at the 0.05 significance level?

    w z
    1 6350
    2 5695
    2 5750
    3 5395
    5 4985
    5 4895

    See attached file for full problem description.

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    Solution Preview

    I did this in SPSS, but you can do the same analysis with any program that can do a linear regression.

    First I put the data into 2 columns (just like in the table above). Then I made another column that was made up of the logarithms of the values in the z ...