Economics Case

To determine the factors that affect Selling Price of Ford Mustangs, we have selected nine independent variables (Independent factors) to test the hypothesis that, if these factors affect the selling price of Ford Mustangs cars?. The nine Independent variables that we have used to study the relationship with selling price are (1) Whether the car is a convertible or not convertible (2) Age of Car (3) Miles it has run (4) Transmission Type, whether automatic or manual (5) Air conditioner or not (6) Number of Cylinders in Engine (7) Color (8) GT Model or not (9) Private owner or dealer owner.

We conducted hypothesis test to study the relationship of each independent variable with the selling price at 0.05 significance level. To study the affect of the independent variable "CONVERT" on the selling price, we have set the following Null and Alternate Hypothesis.

Null Hypothesis : There is no relationship between CONVERT and selling price.

Alternate Hypothesis : There is a relationship between CONVERT and selling price.

Using the independent variable CONVERT and the dependent variable Selling price, following Regression output is generated by Excel Data Analysis.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.386986

R Square 0.149758

Adjusted R Square 0.123993

Standard Error 3541.151

Observations 35

ANOVA

df SS MS F Significance F

Regression 1 72887081 72887081 5.812481 0.021642

Residual 33 4.14E+08 12539754

Total 34 4.87E+08

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 7281.2 708.2303 10.28084 0.0000 5840.293 8722.107

CONVERT 3194.4 1324.978 2.410909 0.021642 498.7108 5890.089

In the lower part of the ANOVA in the above output, we see that the p-value of the t-statistic of CONVERT is 0.0216, which is smaller than our designated significance level of 0.05. Therefore, we reject the Null Hypothesis and accept the Alternate Hypothesis at 0.05 significance level.

Thus, we conclude that there is a significant relationship between the factor "CONVERT" and the dependent variable "SELLING PRICE".

In the similar manner as we did above,