The Table Below Lists Weights (Carats)and Prices (Dollars)for Randomly Selected

question 36

Essay

The table below lists weights (carats)and prices (dollars)for randomly selected diamonds.
Find the regression equation, letting the weight be the predictor variable. Find the best
predicted price for a diamond with a weight of 1.50 carats. What is wrong with predicting the
price of a 1.50-carat diamond? $$\begin{array} { | l | l | l | l | l | l | l | } \hline \text { Weight } & 0.3 & 0.4 & 0.5 & 0.5 & 1.0 & 0.7 \\\hline \text { Price } & 510 & 1151 & 1343 & 1410 & 5669 & 2277 \\\hline\end{array}$$

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but does not have full control.

Joint Ventures

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.

Accounting Methods

The specific rules and procedures used by a company to prepare its financial statements, including cost, accrual, and cash basis methods.

Jointly Controlled Entities

A corporate structure where two or more parties have control and share responsibility, rights, and liabilities for the entity's activities.