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. $\hat { y }$ = 120 - 10x

Based on the above estimated regression equation, if price is increased by 2 units, then demand is expected to
A) increase by 120 units.
B) decrease by 100 units.
C) increase by 20 units.
D) decease by 20 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.   $\hat { y }$ = 120 - 10x
 
Based on the above estimated regression equation, if price is increased by 2 units, then demand is expected to
A) increase by 120 units.
B) decrease by 100 units.
C) increase by 20 units.
D) decease by 20 units.

Quizplus · Accepted Answer

The coefficient of x in the regression equation is -10, which means for every 1 unit increase in price, demand decreases by 10 units. Therefore, if the price increases by 2 units, demand is expected to decrease by 20 units (2 * -10 = -20).

Regression Analysis Was Applied Between Demand for a Product (Y) y^\hat { y }y^​

Regression Analysis Was Applied Between Demand for a Product (Y) $\hat { y }$