Table 10.15 shows data on two variables for the UK from the Central Statistical Office for the…

Table 10.15 shows data on two variables for the UK from the Central Statistical Office for the period 1970 to 2003.

(a) What type of causal relationship might you expect between these two variables?

(b) Draw a scatter diagram for this data and comment on any relationship observed.

(c) For the period 1970–89 estimate a regression model for this data. Estimate a second equation for the entire period. Estimate a third for the period 1991 to 2003.

(d) Evaluate the regression models statistically.

(e) Evaluate the regression equations in terms of their likely reliability for forecasting.

(f) Using the equations, forecast Cars for 2006. Assess the reliability of your forecasts. Comment on the likely factors causing inaccuracies in your forecasts.

 

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