If we have data on both sales revenue and price levels. We want to estimate how...

If we have data on both sales revenue and price levels.

We want to estimate how relevant the effect of price on sales is meaning we would like to regress sales on price.

But someone already used THE SAME data set to regress price on sales and found it to have a coefficient of determination equal to 0.45.

Would we still need to run the regression of sales on price in order to find out the associated coefficient of determination? and explain.

Thanks.

Expert Solution

In statistics, the coefficient of determination, denoted R² is the proportion of the variance in the dependent variable that is predictable from the independent variable
It represents the percent of the data that is the closes to the line of best fit.
if R² = 0.45, which means that 45 %of the total variation in y ( price ) can be explained by the linear relationship between x ( sale) and y (as described by the regression equation). The other 15% of the total variation in y remains unexplained.
To find out what proportion of variation in sales is explained by linear relation , we need to run the analysis again by regressing sales on price

Rahul Sunny answered 2 years ago

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