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A producer of outdoor clothing used a focus group to obtain information about the demand for...

Question:

A producer of outdoor clothing used a focus group to obtain information about the demand for fleece jackets with built-in battery operated warming panels. At prices of $100, $90, $80, $70, $60, and $50, the focus group demanded 23, 31, 40, 44, 48, and 60 jackets, respectively.

Use the Excel trend-line option to estimate a linear demand function and to determine the associated Upper R squared R2 statistic? What is the linear demand function?

Plotting and Fitting a Demand Curve

The trend-line features of Excel can be used to display the relationship between two variables, such as that between price and quantity demanded of a good. The {eq}R^2 {/eq} value and equation specifying the functional relationship between the variables can be generated as well.

Answer and Explanation:

The following chart shows the trend-line estimated using Excel.

Demand Function and Graph

An easy way to produce this is as follows.

  • Arrange...

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How to Find the Equation of a Trend Line

from GMAT Prep: Help and Review

Chapter 4 / Lesson 20
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