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The following linear demand specification is estimated for Conlan Enterprises, a pricesetting firm: Q = a + bP + cM + dPRWhere Q is the quantity demanded of the product Conlan Enterprises sells, P is
The following linear demand specification is estimated for Conlan Enterprises, a pricesetting firm: Q = a + bP + cM + dPRWhere Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and PR is the price of a related product. The results of the estimation are presented below:DEPENDENT VARIABLE: Q RSQUARE FRATIO PVALUE ON F OBSERVATIONS: 32 0.7984 36.14 0.0001 VARIABLE PARAMETER STANDARD ESTIMATE ERROR TRATIO PVALUEINTERCEPT 846.30 76.70 11.03 0.0001 P 8.60 2.60 3.31 0.0026 M 0.0184 0.0048 3.83 0.0007 PR 4.3075 1.230 3.50 0.0016 Q. Assuming that the income is $10,000, the price of the related good is $40, and Conlan chooses to set the price of this product at $30, determine the following:a. The quantity of product Conlan expect to sellb. The ownprice elasticity of demandc. The income elasticity of demand
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