Barney's Accounting & Tax services is new but a locally well-known accounting firm in Sacramento, CA that completes TAX returns for individuals. Every year firms like Barney's decide how much to charge.

The price determines how many tax returns firms complete each year. Suppose you are the NEW OFFICE manager at Barney's who is tasked to determine what your office should charge next year for tax returns.

Since this is all new to you, over a period of time, you've tried or experimented with a number of prices when running few specials to try to attract customers. As such, you have the following Price and number of completed returns data.

Use this data to answer the following :

Number of Returns completed (Q) Return Price (P)

932 $70

932 70

910 75

920 75

876 80

852 80

811 85

857 80

847 80

865 80

785 90

802 90

789 95

731 95

663 100

709 100

771 90

792 90

831 85

834 80

A.Enter the data in an Excel spread sheet and graph the data usinga SCATTER plot and insert a Trendline function (Place this graph below data and label both axes).

B.Using Excel's Regression analysis, estimate the simple regression (demand for TAX returns) and report the estimated demand equation (you can round the estimated coefficients to 2 or 3 decimal points). Place the regression output in a separate sheet in the same excel file and label the sheet as Reg_Output.

C.What is the R² (report this as a percentage), and based on the reported R² do you think this regression can reasonably be used for analysis?

D.At the 5% level, how significant is the intercept and the return price variables (report the t-statistics for both)?

E.How many returns do you expect to be completed if your firm charge $85 per return (round your answer since returns are completed in whole units)?

F.All else constant, what is the impact on the number of returns demanded if the price of a return increases by $7 (round your answer)?

G.What is the point price elasticity of demand at the charged price of $85?

H.At this price (i.e., $85 per return) are you on the elastic, inelastic or unit-elastic portion of your demand function?

I.Do you recommend an increase, a decrease, or a no change in price (i.e., from the $85 per return) ? How do you justify your recommendation?