An entity has a market-based pricing structure that is based on the quantity demanded. The entity's policy is to always keep total cost of the product at 80% of market price. The entity uses the traditional costing system to establish cost. The budgeted overheads for the period were estimated at $7,500,000. Meanwhile, the budgeted activity level is expected to be 375,000 direct labour hours. Information relating to the total cost of the product at different demand levels are shown below: Demand in quantity(units) 2,500 3,000 Direct material 375,000 450,000 Direct labour ($50 per hour) 1,200,000 1,500,000 Direct expense 675,000 900,000 Fixed selling expense 4,500,000 4,500,000 Required: (a) Determine the straight-line demand/price equation based on the selling prices and quantity demanded. (b) Using the equation to predict quantity demanded when selling price is $4,617.50. (c) Explain briefly the concept of price elasticity of demand and discuss briefly how it impacts pricing decisions.