A Visual Approach to SPSS for Windows 2nd Edition by Leonard Stern

Exercise 5

Using the file 04Cars.sav (see previous problem), form a new variable Markup calculated from the formula Markup = MSRP - Invoice. The variable Markup thus shows how much profit dealers request for each car. In this analysis the purpose is to describe the relation between profit and the price of a new car as indicated on the car's invoice. Do the following:
1. Create the variable Markup using the formula shown above.
2. Form a scatterplot using Invoice as the x-variable and Markup as the y-variable. Include a best-fitting straight line in your scatterplot.
3. Obtain the equation for the straight line that predicts a dealer's markup from the dealer's invoice price.
4. Based on your equation, how much does the markup change for each $1,000 increase in the invoice price of a new car
5. Based on the equation for the best-fitting straight line, what is the predicted markup for a car with an invoice price of $27,500
6. Obtain a list of residuals of markups that have standardized values greater than 3. Which manufacturer(s) have unusually high markups Which have unusually low markups
7. Is the assumption of homogeneity of variance of the residuals met If the intent of the analysis is to describe a relation between two variables, and not to evaluate whether the relation is statistically significant, is it critical that distributional assumptions of residuals be met Explain.