Assume that a firm wants to use multiple regression analysis on Excel to estimate how the demand for its product X depends on price of its product, consumer's income (i)and a price of a substitute Y. Which of the following explicit linear form should the firm use?
A) $Q _ { X } = a P _ { X } + b \left( I + P _ { Y } \right) + e$
B) $Q _ { X } = a P _ { x } + b _ { 1 } I + b _ { 2 } P _ { Y }$
C) $Q _ { X } = a + b _ { 1 } P _ { X } + b _ { 2 } I + b _ { 3 } P _ { Y } + e$
D) $Q _ { X } = a + b _ { 1 } P _ { X } + b _ { 2 } I + b _ { 3 } Q _ { Y } P _ { Y } + e$

Question

Quizplus · Accepted Answer

Choice C is the correct explicit linear form for a multiple regression analysis because it correctly models the demand for product X ($Q_X$) as a function of its price ($P_X$), consumer's income ($I$), and the price of a substitute ($P_Y$), with each independent variable having its own coefficient ($b_1, b_2, b_3$) and an intercept term ($a$). This form allows for the independent assessment of each variable's impact on $Q_X$.

Assume That a Firm Wants to Use Multiple Regression Analysis QX=aPX+b(I+PY)+eQ _ { X } = a P _ { X } + b \left( I + P _ { Y } \right) + eQX​=aPX​+b(I+PY​)+e

Assume That a Firm Wants to Use Multiple Regression Analysis $Q _ { X } = a P _ { X } + b \left( I + P _ { Y } \right) + e$