Color Tile, LLC has been hired to analyze demand in 30 regional markets for Product Y, a major item. A statistical analysis of demand in these markets shows (standard errors in parentheses):

Q_Y = 26,950 400P + 220P_X + 0.06A + 0.01I

(11,000) (150) (180) (0.3) (0.05)

R² = 0.95

Standard Error of the Estimate = 10

Here, Q_Y is market demand for Product Y, P is the price of Y in dollars, A is dollars of advertising expenditures, P_X is the average price in dollars of another (unidentified) product, and I is dollars of household income. In a typical market, the price of Y is $100, P_X is $70, advertising expenditures are $50,000, and average family income is $80,000.

1. Use the estimated demand function to calculate the expected value of Q_Y in a typical market.
2. Calculate the 95% confidence interval within which you would expect to find actual values of sales. Calculate the point price elasticity of demand, advertising point elasticity, and cross-price point elasticity.
3. Would a reduction in price result in an increase in total revenues? Why? or Why not?
4. Which variables in this regression model are statistically significant at the 95 percent level? Show your work.