▁supply ) ▁using ▁regression ▁analysis ▁on ▁observations ▁of ▁Q ▁and ▁P : ▁one ▁cannot ▁estimate ▁a ▁down ward ▁slope ▁and ▁an ▁up ward ▁slope ▁with ▁one ▁linear ▁regression ▁line ▁involving ▁only ▁two ▁variables . ▁Add itional ▁variables ▁can ▁make ▁it ▁possible ▁to ▁identify ▁the ▁individual ▁relations . ▁ ▁In ▁the ▁graph ▁shown ▁here , ▁the ▁supply ▁curve ▁( red ▁line , ▁up ward ▁s lop ing ) ▁shows ▁the ▁quantity ▁supplied ▁depending ▁posit ively ▁on ▁the ▁price , ▁while ▁the ▁demand ▁curve ▁( black ▁lines , ▁down ward ▁s lop ing ) ▁shows ▁quantity ▁depending ▁neg atively ▁on ▁the ▁price ▁and ▁also ▁on ▁some ▁additional ▁variable ▁Z , ▁which ▁affect s ▁the ▁location ▁of ▁the ▁demand ▁curve ▁in ▁quantity - price ▁space . ▁This ▁Z ▁might ▁be ▁consum ers ' ▁income , ▁with ▁a ▁rise ▁in ▁income ▁sh ifting ▁the ▁demand ▁curve ▁out wards . ▁This ▁is ▁symbol ically ▁indicated ▁with ▁the ▁values ▁ 1 , ▁ 2 ▁and ▁ 3 ▁for ▁Z . ▁ ▁With ▁the ▁quantities ▁supplied ▁and ▁demanded ▁being ▁equal , ▁the ▁observations ▁on ▁quantity ▁and ▁price ▁are ▁the ▁three ▁white ▁points ▁in ▁the ▁graph : ▁they ▁reve al ▁the ▁supply ▁curve . ▁Hence ▁the ▁effect ▁of ▁Z ▁on ▁demand ▁makes ▁it ▁possible ▁to ▁identify ▁the ▁( pos itive ) ▁slope ▁of ▁the ▁supply ▁equation . ▁The ▁( negative ) ▁slope ▁parameter ▁of ▁the ▁demand ▁equation ▁cannot ▁be ▁identified ▁in ▁this ▁case . ▁In ▁other ▁words , ▁the ▁parameters ▁of ▁an ▁equation ▁can ▁be ▁identified ▁if ▁it ▁is ▁known ▁that