Data Inc. produces price customization software calledBuy It. Based on an analysis of monthly product sales over a one-year period, Data Inc.'s marketing department estimates the demand forBuy Itto be:

QB= 1,200 - 8PB+ 4PS

QBdenotes units sold ofBuy Itsoftware, PBdenotesBuy It'sprice, and PSdenotes the price of a best-selling sales analytics software package (with both prices in dollars). The standard error of the estimate is 21.

a) Currently, PB= $200 and PS= $250. What is the predicted demand forBuy Itsoftware? (10 points)

b) An industry analyst comments that demand forBuy Itis not very sensitive to changes in the price of the statistical software package PS. Carefully assess this contention. Do you agree or disagree? (20 points)

c) A marketing department analyst realizes that a potentially important determinant of demand forBuy Itsoftware is the price of computer workstations. The analyst reruns the regression model and now includes the price of workstations along with the other variables. What statistics would you like to have - and why - to evaluate the estimate?

And here is the markup rule:

P = [Ep/(1+Ep)] * MC