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

where Q is the quantity demanded of the most popular product B.U. sells, P is the price of that product, M is income, and R is the price of a related product.The regression results are:

Adjusted R Square

0.7619

Independent Variables

Coefficients

Standard Error

t Stat

P-value

Intercept

8400.28

101.97

82.38

7.78E-39

P

-11.505

2.758

-4.171

0.0002

M

0.0034

0.001

2.476

0.0188

R

-4.14

1.228

-3.374

0.0020

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

Now assume that the income is $51,680, the price of the related good is $13.50, and B.U. chooses to set the price of its product at $18.75.

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.If P increases by 4%, what would happen (in percentage terms) to quantity demanded?

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

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