Situation: There\'s a market researcher trying to find the relationship among pr

Question

Situation: There's a market researcher trying to find the relationship among price, type and consumer demand for a product. The researcher wants to find the relationship between demand and price, controlling for type.

If the dependent variable is demand and the independent variables are price and type, and the researcher is controlling for type, I would observe type as the coefficient to be able to run a multiple regression test? Is this correct? I've ruled out simple regression because of the fact that there are two independent variables.

Explanation / Answer

I would assume you would run a multiple regression test using an ANCOVA model (Analysis of covariance), which is what you run when you have both qualitative and quantitative variables. This allows you to control for type. Since type is probably going to be a qualitative variable you would use dummy variables to describe it, having n-1 dummy variables for the n number of different types you have. Hope this helps.

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