Bordeaux wine sold at auction. The vineyards in the Bordeaux region of France are known for producing excellent red wines. However, the uncertainty of the weather during the growing season, the phenomenon that wine tastes better with age, and the fact that some Bordeaux vineyards produce better wines than others encourage speculation concerning the value of a case of wine produced by a certain vineyard during a certain year (or vintage). As a result, many wine experts attempt to predict the auction price of a case of Bordeaux wine. The publishers of a newsletter titled Liquid Assets: The International Guide to Fine Wine discussed a multiple regression approach to predicting the London auction price of red Bordeaux wine in Chance (Fall 1995). The natural logarithm of the price y (in dollars) of a case containing a dozen bottles of red wine was modeled as a function of weather during growing season and age of vintage using data collected for the vintages of 1952–1980. y is the natural logarithm of the price (in dollars) of a case of bottles of red wine X, is the vintage year Xz is the average growing season temperature Model: Coefficients and (t statistics) X;:0.240 (32.129) X3:0.608 (5.241) Interpret the coefficients of this model.
Bordeaux wine sold at auction. The vineyards in the Bordeaux region of France are known for producing excellent red wines. However, the uncertainty of the weather during the growing season, the phenomenon that wine tastes better with age, and the fact that some Bordeaux vineyards produce better wines than others encourage speculation concerning the value of a case of wine produced by a certain vineyard during a certain year (or vintage). As a result, many wine experts attempt to predict the auction price of a case of Bordeaux wine. The publishers of a newsletter titled Liquid Assets: The International Guide to Fine Wine discussed a multiple regression approach to predicting the London auction price of red Bordeaux wine in Chance (Fall 1995). The natural logarithm of the price y (in dollars) of a case containing a dozen bottles of red wine was modeled as a function of weather during growing season and age of vintage using data collected for the vintages of 1952–1980. y is the natural logarithm of the price (in dollars) of a case of bottles of red wine X, is the vintage year Xz is the average growing season temperature Model: Coefficients and (t statistics) X;:0.240 (32.129) X3:0.608 (5.241) Interpret the coefficients of this model.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Bordeaux wine sold at auction. The vineyards in the Bordeaux region of France
are known for producing excellent red wines. However, the uncertainty of the
weather during the growing season, the phenomenon that wine tastes better
with age, and the fact that some Bordeaux vineyards produce better wines than
others encourage speculation concerning the value of a case of wine produced
by a certain vineyard during a certain year (or vintage). As a result, many wine
experts attempt to predict the auction price of a case of Bordeaux wine. The
publishers of a newsletter titled Liquid Assets: The International Guide to Fine
Wine discussed a multiple regression approach to predicting the London
auction price of red Bordeaux wine in Chance (Fall 1995). The natural logarithm
of the price y (in dollars) of a case containing a dozen bottles of red wine was
modeled as a function of weather during growing season and age of vintage
using data collected for the vintages of 1952-1980.
y is the natural logarithm of the price (in dollars) of a case of bottles of red wine
X, is the vintage year
Xz is the average growing season temperature
Model:
Coefficients and (t statistics)
X:0.240 (32.129)
X2: 0.608 (5.241)
Interpret the cocfficients of this model.
Your answer
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