A Regression Analysis Between Demand (Y in 1000 Units) and Price

question 47

Multiple Choice

A regression analysis between demand (y in 1000 units) and price (x in dollars) resulted in the following equation: ​ = 9 - 4x
​
The above equation implies that if the price is increased by $1, the demand is expected to

• A) increase by 5 units.
• B) decrease by 4 units.
• C) decrease by 5000 units.
• D) decrease by 4000 units.

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Definitions:

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit, often leading to market failure if unaddressed.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences.

Moral Hazard

The situation in which one party can take risks because they know that they will not have to bear the full consequences of their actions.