For a given product demand, the regression equation is 53 - 4x. The negative sign on the slope of the equation: A) is a mathematical impossibility. B) is an indication that the forecast is biased, with forecast values lower than actual values. C) is an indication that product demand is declining. D) implies that the coefficient of determination will also be negative. E) implies that the cumulative error will be negative.

Question

Business

Reginald Irwin

5 March, 15:40

For a given product demand, the regression equation is 53 - 4x. The negative sign on the slope of the equation: A) is a mathematical impossibility. B) is an indication that the forecast is biased, with forecast values lower than actual values. C) is an indication that product demand is declining. D) implies that the coefficient of determination will also be negative. E) implies that the cumulative error will be negative.

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Answers (1)

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Jimena Berger · Answer 1

The answer here would be option C) from the answer list or option or is an indication that product demand is declining.

Explanation:

The demand function basically studies or examines the relationship between the quantity demanded of a product and its price. Usually, for any normal good or product, as the price of the good increases or the good or the product becomes more expensive, the quantity demanded of the particular product or good falls or decreases. Therefore, the relationship between the demand and price of any product or good is inverse or negative. As a result, the slope of the demand curve is also negative reflecting the negative or inverse relationship between price and demand of any normal product or good. Hence, the negative slope in the regression equation for a product demand implies that as price of the product or good increases its demand falls reinforcing the negative/inverse relationship between demand and price.