Predicting red wine prices. 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 encourages 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. Three models were fit to the data. The results of the regressions are summarized in the table above
(a) For each model, conduct a t-test for each of the β parameters in the model. Interpret the results.
(b) Interpret the β estimates of each model.
(c) The three models for auction price (y) have R2 and s values, as shown in the table. Based on this information, which of the three models would you use to predict red Bordeaux wine prices? Explain.