Regression analysis was applied between demand for a product (y) and the price of the product (x), and the following estimated regression equation was obtained. = 120 - 10x

Based on the above estimated regression equation, if price is increased by 3units, then demand is expected to
A) increase by 120 units.
B) decrease by 100 units.
C) increase by 30 units.
D) decease by 30 units.

Question

Regression analysis was applied between demand for a product (y) and the price of the product (x), and the following estimated regression equation was obtained. ​  = 120 - 10x
​
Based on the above estimated regression equation, if price is increased by 3units, then demand is expected to
A) increase by 120 units. 
B) decrease by 100 units. 
C) increase by 30 units. 
D) decease by 30 units.

Quizplus · Accepted Answer

According to the estimated regression equation, for every unit increase in price, the demand is expected to decrease by 10 units. Therefore, if the price is increased by 3 units, the demand is expected to decrease by 3 x 10 = 30 units.

Regression Analysis Was Applied Between Demand for a Product (Y)