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

question 93

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 + β₁X² + 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, what is the value of the test statistic for testing whether there is an upward curvature in the response curve relating the demand (Y) and the price (X) ?

• A) -5.14
• B) 0.95
• C) 373
• D) None of the above.

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Definitions:

Social Commerce

The integration of online social networks with e-commerce, enabling the buying and selling of products and services directly through social media platforms.

Perpetuity

A financial term describing an infinite series of periodic payments or cash flows that continue indefinitely, often used to calculate the present value of such payments.

Consumer Decision Making Process

The consumer decision making process is a series of steps that shoppers follow to make choices about which products or services to buy.

Social Media Users

Individuals who use platforms on the internet to create, share, or exchange information, ideas, pictures/videos in virtual communities and networks.