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Author Question: A certain type of rare gem serves as a status symbol for many of its owners. In theory, for low ... (Read 94 times)

dejastew

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A certain type of rare gem serves as a status symbol for many of its owners. In theory, for low prices, the demand decreases as the price of the gem increases. However, experts hypothesize that when the gem is valued at very high prices, the demand increases with price due to the status the owners believe they gain by obtaining the gem. Thus, the model proposed to best explain the demand for the gem by its price is the quadratic model

E(y) = β0 + β1x + β2x2

where y = Demand (in thousands) and x = Retail price per carat (dollars).

This model was fit to data collected for a sample of 12 rare gems. A portion of the printout is given below:



Root MSE12.42R-Square.988


Does the quadratic term contribute useful information for predicting the demand for the gem? Use


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Marked as best answer by dejastew on Feb 14, 2020

Liddy

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dejastew

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Reply 2 on: Feb 14, 2020
YES! Correct, THANKS for helping me on my review


olderstudent

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Reply 3 on: Yesterday
Gracias!

 

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