Multicollinearity problem with fitting a polynomial model

Reference no: EM131415732

Coding quantitative data

Use the coding system for observational data to fit a second-order model to the data on demand y and price p given in the following table.

Show that the inherent multicollinearity problem with fitting a polynomial model is reduced when the coded values of p are used.

DEMAND
DEMAND y, pounds	1,120	999	932	884	807	760	701	688
PRICE p, dollars	3.00	3.10	3.20	3.30	3.40	3.50	3.60	3.70

Reference no: EM131415732

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