Question

How would you use multiple regression analysis to purchase a used car? List all the variables you would use to and what type of analysis weights you would place on them?

Answer 1

There is no specific answer to this problem. Whatever we take we can always improvise it with multiple regression.

But we can create a rough model.

So you are going to buy a used car what factors will you consider Kilometers driven or Miles driven till date.

body condition , engine condition , servicing reports , price of other cars( similar models ), number of previous owners ,model make year etc.

we can have so many factors. but important is which will be the dependent variable ......what you are going to give for that car?? Money right! So it can be your dependent variable. You change other factors it will change the price.In theory this is how it should work.

weights will be your coefficients of these independent variables.

so for example if miles driven is more you will pay less right?

so it will have a negative coefficient and also a effective one means more weight to this factor as it is one of the crucial factors for used cars.

if you are using some rating for condition of car like 6/10 then this will have a positive relationship.

similarly you can have different weights according to variables.

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