Question

The Law of Supply: The Law of Supply states that an increase in price will result in an increase in the quantity supplied (assuming all other factors remain unchanged). Below is the scatterplot, regression line, and corresponding statistics for Price (x) -vs- Quantity Supplied (y) data.

Price -vs- Supply: x = Price per item (in dollars) y = Supply (Quantity Supplied) correlation coefficient: r = 0.884 regression equation: ŷ = 104.22x − 28.7 sample size: n = 12

Answer the following questions regarding the relationship between price (x) and supply (y).

(a) What is the slope of the regression equation?

12

−28.7

    

104.22

0.884

(b) With respect to the variables involved, choose the best interpretation of the slope of the regression equation.

For every extra unit supplied, you can expect the price to decrease by 104.22 dollars.For every extra unit supplied, you can expect the price to increase by 104.22 dollars.    For every 1 dollar increase in price, you can expect the supply to decrease by 104.22 units.For every 1 dollar increase in price, you can expect the supply to increase by 104.22 units.

Additional Materials

Answer 1