TABLE 15-1 A Certain Type of Rare Gem Serves as a Status

question 2

Multiple Choice

TABLE 15-1
A certain type of rare gem serves as a status symbol for many of its owners.In theory,for low prices,the demand increases and it decreases as the price of the gem increases.However,experts hypothesize that when the gem is valued at very high prices,the demand increases with price due to the status owners believe they gain in obtaining the gem.Thus,the model proposed to best explain the demand for the gem by its price is the quadratic model:
Y = β₀ + β₁X + β₂X² + ε
where Y = demand (in thousands) and X = retail price per carat.
This model was fit to data collected for a sample of 12 rare gems of this type.A portion of the computer analysis obtained from Microsoft Excel is shown below:
-Referring to Table 15-1,does there appear to be significant upward curvature in the response curve relating the demand (Y) and the price (X) at 10% level of significance?

• A)Yes,since the p-value for the test is less than 0.10.
• B)No,since the value of β₂ is near 0.
• C)No,since the p-value for the test is greater than 0.10.
• D)Yes,since the value of β₂ is positive.

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Definitions:

Median

The middle value in a sorted list of numbers, effectively dividing the dataset into two halves.

IQR

IQR, or Interquartile Range, measures the middle 50% spread of a dataset by calculating the difference between the first (25th percentile) and third (75th percentile) quartiles.

Range

The difference between the highest and lowest values in a dataset.

Median

The middle value in a data set when it is organized in ascending or descending order, or the average of the two middle values if the set has an even number of observations.