Question

Price of eggs and milk: The following table presents the average price in dollars for a dozen eggs and a gallon of milk for each month from February through November

2001. Use a TI-84 calculator to answer the following.

Dozen Eggs	Gallon of Milk
1.21	2.66
1.13	2.67
1.01	2.69
1.20	2.68
1.15	2.71
1.28	2.67
1.26	2.90
1.33	2.91
1.45	2.94
1.56	2.95

If the price of eggs differs by $0.30 from one month to the next, by how much would you expect the price of milk to differ? Round your answer to at least two decimal places.

Answer 1

Let 'Y' represent the variable 'Gallon of Milk' and 'X' be the variable 'Dozen Eggs'.

So, here Y is dependent variable while X is independent.

We need to find a linear relation between X and Y such that -

Y = a + bX

We can use linear regression technique from calculator to get the coefficients 'a' and 'b'.

You can use following steps in your calculator -

1) Go to Stat and then Edit

2) Enter X values in L1 and Y values in L2.

3) Then go to 2nd

4) Go in STAT mode and then in CALC

5) You can use LinReg(aX+b) to solve this.

Make sure to put L1, L2 after LinReg(aX+b) in step 5. This will give you the equation as -

Y = 1.982629 + 0.63225 (X).

This indicates that the price of one gallon of milk (Y) increases by $0.63225 with a unit increment in price of dozen of eggs (X).

Thus, if the price of dozen of egg differs by $0.3 by next month then the expected change in price of gallon of milk is = 0.3*0.63225

= 0.189675

So, the price of gallon of would increase by approximately $0.19.