Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 37

You have been hired by Dominos Pizza to estimate the demand curve for pizza using 24 months of data on price and quantity in ten major cities. Here are two methods you might use to determine this demand curve. Explain why each is probably incorrect.
Method 1: Plot all 240 data points on a single graph and draw a carefully fit line through these points.
Method 2: Plot 10 different demand curve graphs, one for each city. Carefully fit a demand curve to the data for each city. Calculate the average slope for these ten graphs and use that as your estimate of how pizza demand relates to price.