Homework 4

Consider the dataset on prices of diamonds.

1) Is there a relationship between carats and price? If so, how strong is it? Describe the relationship in your own words.

2) Are there any outliers in this data set? (whether or not you find any, do not remove any data points)

3) What is the least squares regression model relating carats and price that can be used to predict price? Check all the assumptions and describe your findings.

4) The following line is part of the MINITAB output of the regression command:
 Predictor  Coef  SE Coef  T  P
 Constant  -259.63  17.32  -14.99  0.000
The P at the end indicates that there is some hypothesis test here. Explain what the test is and what the result is telling us about our model.

5) Find a 90% interval estimate for the price of a diamond ring that has a 0.2 carat diamond.

6) Use the model from part 3) to estimate the price of a diamond ring that has no diamond (not an interval estimate, just one number). Is there anything strange about your answer? Suggest a possible reason for this problem.

7) Include the following graph in your solution:

(Hint: look at Editor > Layout Tool)