Bob's Underground, a limited liability corporation specializing in new rap artists (B.U. LLC, rap) has the following demand function:

Q = a + bP + cM + dR

whereQis the quantity demanded of the most popular product B.U. sells,Pis the price of that product,Mis income, andRis the price of a related product.The regression results are:

Adjusted R Square

0.8257

Independent Variables

Coefficients

Standard Error

t Stat

P-value

Intercept

9998.24

72.84

137.26

6.54E-46

P

-5.557

2.066

-2.689

0.011

M

0.0039

0.001

3.258

0.003

R

4.92

1.018

4.829

3.27E-05

a.Discuss whether you think these regression results will generate good sales estimates for B.U. LLC, rap.

Now assume that the income is $53,425, the price of the related good is $17.75, and B.U. chooses to set the price of its product at $16.25.

b.What is the estimated number of units sold given the data above? (round to nearest unit; no decimals)

c.What are the values for the own-price, income, and cross-price elasticities?

d.IfPincreases by 4%, what would happen (in percentage terms) to quantity demanded?

e.IfMdecreases by 3%, what would happen (in percentage terms) to quantity demanded?

f.IfRincreases by 6%, what would happen (in percentage terms) to quantity demanded?