Practical Regression Problem

• Lets try to do the regression analysis of the the following dataset Refer Here

• Lets check for Linearity

  • Mileage vs price
  • Engine vs price
  • Year vs price
  • Mileage vs log(price)
  • Engine vs log(price)
  • Year vs log(price)

• Since we have 7-distinct categories in category variable Brand, we have created the six dummy variables (Rule => n-1)

• Lets create one more variable for log(mileage) just for understanding

• Regression Analysis of

  • Log price and Log mileage
  • Log price and year
  • Log price and Engine
  • log price and log mileage, year and Engine
  • Log price vs log mileage, year, engine and other categorical dummies (brands)

Lets do some more analysis

• For 1% in mileage, the price decreases by 0.11%
• For each unit (litre) increase in Engine volume, log price increase by 0.14
• For each extra unit (litre increase) of volume log increases by 0.14 and price increases by 15%
• When year increases by 1 year the log price increases by 0.04 and price increase by 4%
• Solved sheet Refer Here