Typically, the sales volume declines with an increase of a product price. It has
ID: 3052447 • Letter: T
Question
Typically, the sales volume declines with an increase of a product price. It has been observed, however, that for some luxury goods the sales volume may increase when the price increases. The following Excel output illustrates this rather unusual relationship. Scatterplot of Price Vs Sales for a Luxury Good 500 y-0 3224-1637.6 a00012 2000 ya 02702.. 57 463. 4212 :0.0007x 00352-34 581 35392 R 0.805 1500 Scatterplot of Price vs Sales for Luxury Good 1000 Linear (Scatterplot of Price Vs Sales for a Lunury Good) Poly (3cetterplot of Price Vs Sales for Luxury Good Poly.(Scaterplot of Price Vs Sales for Luwuity Good SO 100 150 200 Which of the following models is most likely to be chosen in order to describe the relationship between Price and Sales? Linear O Quadratic CubicExplanation / Answer
Solution
Quadratic
The relationship between price and sales is Quadratic as
The graph of a quadratic function is called a parabola and has a curved shape. One of the main points of a parabola is its vertex. It is the highest or the lowest point on its graph.
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