A regression analysis linking demand (y in 1000 units) to price (x₁ in dollars) and advertising (x₂ in $1000s) resulted in the following equation: estimated Y = 9 - 5x₁ + 2x₂.This equation implies that a $1 increase in price can be associated with a ____ in demand. A)9000 - 5000 = 4000 unit increase B)9000 unit decrease C)9000 + 5000 = 14,000 unit decrease D)5,000 unit decrease E)none of the above

Question

Quizplus · Accepted Answer

The coefficient for price (x₁) is -5, indicating that for every $1 increase in price, demand decreases by 5000 units (since demand is measured in 1000 units, -5 translates to -5000 units).

A Regression Analysis Linking Demand (Y in 1000 Units) to Price