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. = 120 - 10x

Based on the above estimated regression equation, if price is increased by 3units, then demand is expected to
A) increase by 120 units.
B) decrease by 100 units.
C) increase by 30 units.
D) decease by 30 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. ​  = 120 - 10x
​
Based on the above estimated regression equation, if price is increased by 3units, then demand is expected to
A) increase by 120 units. 
B) decrease by 100 units. 
C) increase by 30 units. 
D) decease by 30 units.

Quizplus · Accepted Answer

According to the estimated regression equation, the slope coefficient is -10 which means that for every 1 unit increase in price (x), demand (y) will decrease by 10 units. Therefore, if price is increased by 3 units, demand is expected to decrease by 3*(-10) = -30 units.

Regression Analysis Was Applied Between Demand for a Product (Y)