Question

Using Module 7 Excel Assignment regression data set: the relationship between Income Per Household and Quantity Demanded of Heating Oil is:

Select one:

a. Depends on Income

b. Can not be determined

c. positive

d. negative

Quantity Demanded of Heating Oil	Income Per Household	Price of Heating Oil
7.1	9	50
5.7	9	50
10.3	10	50
11.8	10	50
11.9	11	50
13.9	11	50
5.7	11	60
6.6	11	60
11.5	12	60
12.6	12	60
16.8	13	60
14.4	13	60
13.2	13	70
9.7	13	70
16	14	70
9.3	14	70
19	15	70
21.5	15	70
11.3	15	80
15.6	15	80
15.6	16	80
15.8	16	80
21.7	17	80
20.9	17	80
Quantity Demanded of Heating Oil is the dependent variable

Answer 1

The correct answer is option C

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To understand the relationship between quantity demanded of heating oil and income per household, we have to perform a regression analysis between the two variables.

The regression equation is given as

y = b₀ + b₁ X

where b₀ = intercept

b₁ = slope

y = dependent variable = Quantity Demanded of Heating Oil

x = independent variable = Income Per Household

The regression analysis is done using excel and the values of b₀ and b₁ are determined.

b₀ = - 6.53

b₁ = 1.52

The regression equation becomes

y = - 6.53 + 1.52 X

From the above equation , we observe that the coefficient of the independent variable is positive which means that as income increases, the quantity demanded of heating oil also increases. Thus the dependent variable and the independent variable have a positive relationship.