A regression analysis between demand (y in 1000 units) and price (x in dollars) resulted in the following equation: $\hat { y }$ = 9 - 3x

The above equation implies that if the price is increased by $1, the demand is expected to
A) increase by 6 units.
B) decrease by 3 units.
C) decrease by 6000 units.
D) decrease by 3000 units.

Question

A regression analysis between demand (y in 1000 units) and price (x in dollars) resulted in the following equation:   $\hat { y }$ = 9 - 3x
 
The above equation implies that if the price is increased by $1, the demand is expected to
A) increase by 6 units.
B) decrease by 3 units.
C) decrease by 6000 units.
D) decrease by 3000 units.

Quizplus · Accepted Answer

The coefficient of x in the equation is -3, which means for every $1 increase in price, the demand decreases by 3 units. Since y is in 1000 units, this translates to a decrease of 3000 units.

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