A regression analysis linking demand (y in 1000 units) and price (x in $) resulted in the following equation: estimated Y = 9 - 3x.This equation implies that if the price is decreased by $1, demand can be expected to:
A)increase by 9,000 units
B)decrease by 9,000 units
C)decrease by 3,000 units
D)increase by 3,000 units
E)none of the above

Question

Quizplus · Accepted Answer

The equation shows that for every $1 decrease in price (x), demand (Y) increases by 3,000 units, as indicated by the coefficient of -3x. This means for each $1 decrease in price, demand increases, not decreases, and the magnitude of change is 3,000 units, not 9,000.

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