The Following Data Show the Demand for an Airline Ticket

question 18

Multiple Choice

The following data show the demand for an airline ticket dependent on the price of this ticket. For the assumed cubic and log-log regression models,Demand = β₀ + β₁Price + β₂Price² + β₃Price³ + ε and ln(Demand) = β₀ + β₁ln(Price) + ε,the following regression results are available. Assuming that the sample correlation coefficient between Demand and = exp(26.3660 - 3.2577 ln(Price) + (0.2071) ²/2) is 0.956,what is the predicted demand for a price of $250 found by the model with better fit?

• A) 4,447.88
• B) 3,914.38
• C) 4,029.38
• D) 5,137.60

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Definitions:

Variability

The extent to which data points differ from each other and from the mean of the data set.

Sampling Distribution

The distribution that indicates the probabilities of a given statistic, which is acquired from a random sample.

T-distribution

A probability distribution used in statistics that arises when estimating the mean of a normally distributed population in situations where the sample size is small and the population standard deviation is unknown.

Standard Normal Distribution

Normal distribution measured in standard deviation units with a mean equal to 0 and a standard deviation equal to 1.