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An Economist Wishes to Build a Model to Explain the Relationship

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Essay

An economist wishes to build a model to explain the relationship between the number of diamonds purchased every year and the average income of consumers in that year. Which variable should be the dependent variable and which should be the independent variable? All else equal, do you expect this relationship to be positive or negative? Explain.


Definitions:

Online Sales

Transactions that occur on the internet where buyers purchase goods or services from sellers over digital platforms.

Retail Store

A physical or digital establishment that sells goods directly to the public for personal or household consumption.

Single Distribution Network

A centralized distribution method where all products are delivered from a single facility or warehouse to all consumers or retailers.

Niche Companies

Businesses that target and serve a specific segment of the market, often focusing on unique needs and preferences.

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