Download Demand Analysis

Professional Data Analysis
DR HAB.. EWA KUSIDEŁ
F112, TUESDAY 10.00-11.30
LECTURE NR 2
[email protected]
select the corect answer
Correlation coefficient (rxy) is a measure which can differ (vary)
between –1 and 1
yes
no
Module of rxy is a power of the relationship
yes
no
Sign of rxy inform us about direction of relationship
yes
no
If x grows then y falls or if x falls then y grows – this is the example
of
Negative
correlation
Positive
correlation
If x grows then y grows or if x falls then y falls – this is the example
of
Negative
correlation
Positive
correlation
Which value of correlation coefficient shows stronger relationship
0,2
0,8
Which value of correlation coefficient shows no relationship
0
-1
A graphic picture of the relationship between the two variables is
called
Scatter
diagram
Linear
chart
Answer the question
Which of below graph shows no relationships between variables
Diagram nr 3 shows no correlation
Problems and projects
Hypothetical demand data for toasters are shown below. Plot the demand
curve and answer the questions




Price (£)
Quantity
demanded
(milions)
10
10
12
9
14
8
16
7
18
6
20
5
What is the sign of correlation coeficient between price and demand?
Is the power of correlation coeficient high?
Estimate the parameters of the demand curve
Let’s imagine the tosters are a snobish good and that quantity demanded is
contrary of the above (i.e. 5,6,7,8,9,10 at a price of 10,12,14,16,18,20). What
is shape of demand curve
Anwers to the problem and project task
Demand
Interpretation of demand curve
• What is the sign of correlation coeficient
• If x (price) grows (falls) by 1 unit (1
between price and demand? - negative
pound) then y (demand) falls
• Is the power of correlation coeficient
(grows) by 0,5 unit (millions of
high? – very high
pieces)
• Estimate the parameters of the demand
• What happens to the demand (y)
curve – y=-0,5x+15
when price falls by 2 pounds.
• The demand increases (grows) by
1unit (million of pieces)
• If price increases by 5 units then
12
demand decreases by 2,5.
10
• What should we do with the price if
8
y = -0,5x + 15
we want to increase our demand by
6
2 units. The price must decrease by
4
4 units.
2
0
0
5
10
Price
15
20
25
Homework
 Let’s imagine the tosters (from problem and project
task) are a snobish good and that quantity demanded
is contrary of the above (i.e. 5,6,7,8,9,10 at a price of
10,12,14,16,18,20). What is shape of demand curve:




What is the sign of correlation coeficient between price and
demand?
Is the power of correlation coeficient high?
Estimate the parameters of the demand curve
Calculate and interpret parameters of new demand curve