Question

Corvette Prices. The Kelley Blue Book provides information on wholesale and retail prices of cars. Following are age and price data for $10$randomly selected Corvettes between $1$and $6$years old.

Here, $x$denotes age, in years, and $y$denotes price, in hundreds of dollars.

Short answer

The residuals are nearly centred and symmetric about the x-axis in a horizontal band. The normal probability plot for the residuals can likewise be described as (almost) linear, however, the deviation from linearity is significant enough to cause worry.

Step-by-step solution

Given information

The given data is

Explanation

Regression-inference assumptions that are met $1-3$necessitates the existence of constants ${\beta }_0,{\beta }_1,\sigma$, such that the prices of all Corvettes of that age are normally distributed with mean ${\beta }_0,{\beta }_1$and standard deviation $\sigma$for each age $x$.

As a result, the residuals are nearly centred and symmetric about the x-axis in a horizontal band. The normal probability plot for the residuals can likewise be described as (almost) linear, however the deviation from linearity is significant enough to cause worry.