Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a Pb Mc P dR where Q = yards of cement demanded monthly, P = the price of Stonebuilt’s cement per yard, M = state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: The estimated demand for cement is… Multiple Choice elastic because Ê = -3.54. inelastic because Ê = -0.461. elastic because Ê = 8.2. elastic because Ê = -2.16. inelastic because Ê = -0.357.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand
Q = a Pb Mc P dR
where Q = yards of cement demanded monthly, P = the price of Stonebuilt’s cement per yard, M = state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below:
The estimated demand for cement is…
-
elastic because Ê = -3.54.
-
inelastic because Ê = -0.461.
-
elastic because Ê = 8.2.
-
elastic because Ê = -2.16.
-
inelastic because Ê = -0.357.
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