Typically, the sales volume declines with an increase of a product price. It has

Question

Typically, the sales volume declines with an increase of a product price. It has been observed, however, that for some luxury goods the sales volume may increase when the price increases The following Excel output illustrates this rather unusual relationship. Scatterplot of Price Vs Sales for a Luxury Good 2500 -03224x * 1637 6 +00012 v 02702-57 463+42123 R 0799 0 0007+0.0352-34 581+3539.2 1500 R 0 8055 5catterglet of Price vs Sales for Luxury Good 1000 Linesr (Scatterplot of Price Vs Sales for a Luxury Goed) -Poly. eserterplot of Price Vs Sales or 500 Luxury Good) Poly esnterplot of Price vs Sales for Luxury Good) 50 100 150 What is the number of estimated coefficients of the cubic regression model?

Explanation / Answer

Ans:

For above graph:

Cubic regression eqn:

y'=ax3+bx2+cx+d

y'=0.0007x^3+0.0352x^2+34.381x+3539.2

We have to estimate 4 cofficients(a,b,c,d) for cubic regression.

So,correct answer will be 4.

(we estiate 3 cofficients for quadratic regression)

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