# 10_09_2 - STAT 420 Examples for 10/09/2007 (2) Fall 2007 A...

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STAT 420 Examples for 10/09/2007 (2) Fall 2007 A collector of antique grandfather clocks knows that the price received for the clocks increases linearly with the age of the clocks. Moreover, the collector hypothesizes that the auction price of the clocks will increase linearly as the number of bidders increases. Thus, the following first-order model is hypothesized: Y = β 0 + β 1 x 1 + β 2 x 2 + ε where Y = Auction price (dollars) x 1 = Age of clock (years) x 2 = Number of bidders A sample of 32 auction prices of grandfather clocks, along with their age and the number of bidders, is given in the table below. Age, x 1 Number of Bidders, x 2 Auction Price, Y Age, x 1 Number of Bidders, x 2 Auction Price, Y 127 13 1,235 170 14 2,131 115 12 1,080 182 8 1,550 127 7 845 162 11 1,884 150 9 1,522 184 10 2,041 156 6 1,047 143 6 845 182 11 1,979 159 9 1,483 156 12 1,822 108 14 1,055 132 10 1,253 175 8 1,545 137 9 1,297 108 6 729 113 9 946 179 9 1,792 137 15 1,713 111 15 1,175 117 11 1,024 187 8 1,593 137 8 1,147 111 7 785 153 6 1,092 115 7 744 117 13 1,152 194 5 1,356 126 10 1,336 168 7 1,262

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