Scenario 5-8 Consider the Markets for Mobile and Landline Telephone Service. Suppose

question 195

Short Answer

Scenario 5-8
Consider the markets for mobile and landline telephone service. Suppose that when the average income of residents of Plainville is $55,000 per year, the quantity demanded of landline telephone service is 12,500 and the quantity demanded of mobile service is 28,000. Suppose that when the price of mobile service rises from $100 to $120 per month, the quantity demanded of landline service decreases to 11,000. Suppose also that when the average income increases to $60,000, the quantity demanded of mobile service increases to 33,000.
-Refer to Scenario 5-8. Considering the income elasticity, what type of good is mobile telephone service?

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Definitions:

Simple Linear Regression

A statistical method for modeling the relationship between a dependent variable and one independent variable.

F Statistic

A ratio of variances that is used primarily in ANOVA to assess whether the variances between groups are significantly different.

Alternative Hypothesis

The hypothesis that proposes a significant difference, relationship, or effect, and is accepted if the null hypothesis is rejected.

Simple Linear Regression

A statistical method that models the relationship between a dependent variable and one independent variable, assuming a linear relationship.