Answer :
The issue with this model is that purchases with a cost of $30 appear to be negative, which is impractical in real-world situations.
This is due to the model's linear best fit line's potential for being inaccurate for the end points.
A linear probability model:
Purchasei = 1.7-0.06×pricei
For an increase in $20 in price,
Change in purchase = -0.06 × 20
change in purchase = -1.2
There would be 1.2 less purchase.
Purchase at price of $10 is:
Purchase 10= 1.7 ×0.06 × 10
Purchase 10 = 1.1
Purchase at price of $30 is:
Purchase 30 = 1.7 × 0.06 × 30
Purchase 30 = -0.1
This is the problem with this model that the purchases at price of $30 is coming as negative which is not possible in practical situation.
It is because that the linear best fit line of the model which might not be accurate for the end points.
Hence we get the required estimates here:
Learn more about Estimate here:
brainly.com/question/28416295
#SPJ4