Assume the Demand for Electricity,a Necessity with Few Substitutes,is -0

question 111

Multiple Choice

Assume the demand for electricity,a necessity with few substitutes,is -0.2.If the electric company raised its rates by 10 percent,we would expect

• A) a 10 percent decrease in quantity demanded.
• B) a 2 percent increase in quantity demanded.
• C) a 10 percent increase in quantity demanded.
• D) a 2 percent decrease in quantity demanded.
• E) a 5 percent decrease in quantity demanded.

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Definitions:

Regression Model

A statistical model that estimates the relationship between a dependent variable and one or more independent variables.

Regression Coefficients

Numeric values that represent the degree of change in the dependent variable expected for a one-unit change in one of the independent variables, holding other factors constant.

Correlated

When two or more variables or sets of data are related in some way, indicating a relationship or dependence between them.

Multicollinearity

A situation in multiple regression models where one predictor variable in the model can be linearly predicted from the others with a substantial degree of accuracy, leading to difficulties in determining the separate effects of predictor variables.