3. (16 points) A manufacturer of small electrical products has developed a flashlight bulb that lasts 3 times longer than the bulbs in current pocket flashlights. In order to help sell flashlights with this improved bulb to a large chain of hardware stores, the manufacturer commissioned a conjoint study in which 650 adult consumers were asked to rank their preferences among a set of alternative pocket flashlight descriptions. The set of alternatives included all combinations of the following two-level variables: the long-lasting bulb versus the ordinary one, a metal case versus a plastic case, and a $4.99 versus a $8.99 price point. A regression analysis was used to determine the results of the study. Dummy-variable coding was used for the bulb and case-type variables. The price variable was coded in dollars. The regression coefficients from the study are as follows:

Variable	Regression Coefficient
Presence of long-lasting bulb	0.72
Presence of metal case	0.09
Price	0.32

1. What is dummy-variable coding? Why was it used in this study?

2. What was the dependent variable in this study?

3. Based on these results, what is the dollar value of the long-lasting flashlight bulb to the respondents in this study? Show your work.

(d) Given your result in Part (c), calculate the maximum price that the manufacturer could charge the hardware store chain for pocket flashlights containing the long-lasting bulb over what is charged for pocket flashlights containing the ordinary bulb. Assume that the retail markup on pocket flashlights is 80 percent. Show your work.