Project:​ ​Diamond​ ​Prices

Step​ ​1:​ ​Understanding​ ​the​ ​Model

Answer ​ ​ the ​ ​ following ​ ​ questions:

1. According​ ​to​ ​the​ ​linear​ ​model​ ​provided,​ ​if​ ​a​ ​diamond​ ​is​ ​ 1 ​ ​carat​ ​heavier​ ​than another​ ​with​ ​the​ ​same​ ​cut​ ​and​ ​clarity,​ ​how​ ​much​ ​more​ ​should​ ​we​ ​expect​ ​to​ ​pay? Why? ○ We​ ​should​ ​expect​ ​to​ ​pay​ ​more​ ​because​ ​the​ ​prediction​ ​taking​ ​from​ ​the historical​ ​data.
2. If​ ​you​ ​were​ ​interested​ ​in​ ​a​ ​1.5​ ​carat​ ​diamond​ ​with​ ​a​ ​​ Very ​ ​ Good ​​ ​cut​ ​(represented by​ ​a​ ​ 3 ​ ​in​ ​the​ ​model)​ ​and​ ​a​ ​​ VS2 ​​ ​clarity​ ​rating​ ​(represented​ ​by​ ​a​ ​ 5 ​ ​in​ ​the​ ​model), how​ ​much​ ​would​ ​the​ ​model​ ​predict​ ​you​ ​should​ ​pay​ ​for​ ​it? ○ The​ ​price​ ​can​ ​be​ ​predicted​ ​from​ ​the​ ​following​ ​equation Price ​​ ​=​ ​-5,269​ ​+​ ​8,413​ ​x​ ​​ Carat ​​ ​+​ ​158.1​ ​x​ ​​ Cut ​​ ​+​ ​ 454 ​ ​x​ ​​ Clarity

Step​ ​2:​ ​Visualize​ ​the​ ​Data

Make​ ​sure​ ​to​ ​plot​ ​and​ ​include​ ​the​ ​visualizations​ ​in​ ​this​ ​report.​ ​For​ ​example,​ ​you​ ​can​ ​create graphs​ ​in​ ​Excel​ ​and​ ​copy​ ​and​ ​paste​ ​the​ ​graphs​ ​into​ ​this​ ​Word​ ​document.

1. Plot​ ​ 1 ​ ​-​ ​Plot​ ​the​ ​data​ ​for​ ​the​ ​diamonds​ ​in​ ​the​ ​database,​ ​with​ ​carat​ ​on​ ​the​ ​x-axis and​ ​price​ ​on​ ​the​ ​y-axis. o
2. Plot​ ​ 2 ​ ​-​ ​Plot​ ​the​ ​data​ ​for​ ​the​ ​diamonds​ ​for​ ​which​ ​you​ ​are​ ​predicting​ ​prices​ ​with carat​ ​on​ ​the​ ​x-axis​ ​and​ ​predicted​ ​price​ ​on​ ​the​ ​y-axis. o Note ​:​ ​You​ ​can​ ​also​ ​plot​ ​both​ ​sets​ ​of​ ​data​ ​on​ ​the​ ​same​ ​chart​ ​in​ ​different colors. o I​ ​will​ ​skip​ ​this​ ​question​ ​and​ ​the​ ​one​ ​below​ ​till​ ​I​ ​learn​ ​more​ ​with​ ​the​ ​next lessons.
3. What​ ​strikes​ ​you​ ​about​ ​this​ ​comparison?​ ​After​ ​seeing​ ​this​ ​plot,​ ​do​ ​you​ ​feel confident​ ​in​ ​the​ ​model’s​ ​ability​ ​to​ ​predict​ ​prices?

Step​ ​3:​ ​Make​ ​a​ ​Recommendation

​ ​​ Answer ​ ​ the ​ ​ following ​ ​ questions:

1. What​ ​price​ ​do​ ​you​ ​recommend​ ​the​ ​jewelry​ ​company​ ​to​ ​bid?​ ​Please​ ​explain​ ​how you​ ​arrived​ ​at​ ​that​ ​number.​​ ​HINT:​ ​The​ ​number​ ​should​ ​be​ ​ 7 ​ ​digits. ○ Currently,​ ​I​ ​am​ ​not​ ​sure​ ​how​ ​to​ ​answer​ ​this​ ​question​ ​accurately,​ ​but​ ​I​ ​with​ ​the coming​ ​lessons​ ​I​ ​will​ ​be.