Using advertised prices for used Ford Escorts a linear model for the relationship between a car's age and its price is found.The regression has an
= 85.8%.Why doesn't the model explain 100% of the variation in the price of an Escort?
A)The model was calculated incorrectly.It should explain all the variation in price.
B)The model is only right 85.8% of the time.
C)14.2% of the time the buyer is getting ripped off by an unscrupulous seller.
D)The prices of all used Ford Escorts were not used.
E)There are other factors besides age that affect the price.These include things such as mileage,options,and condition of the car.

Question

Using advertised prices for used Ford Escorts a linear model for the relationship between a car's age and its price is found.The regression has an 
= 85.8%.Why doesn't the model explain 100% of the variation in the price of an Escort?
A)The model was calculated incorrectly.It should explain all the variation in price. 
B)The model is only right 85.8% of the time. 
C)14.2% of the time the buyer is getting ripped off by an unscrupulous seller. 
D)The prices of all used Ford Escorts were not used. 
E)There are other factors besides age that affect the price.These include things such as mileage,options,and condition of the car.

Quizplus · Accepted Answer

Linear regression models only account for the variation explained by the independent variable(s) included in the model. Other factors, such as mileage, options, and condition of the car, can also affect the price and were not included in the model. Therefore, the model does not explain all of the variation in price.

Using Advertised Prices for Used Ford Escorts a Linear Model