NATURAL MONOPOLY.

YOU WILL USE THIS INFORMATION FOR THIS QUESTION PLUS THE NEXT TWO QUESTIONS.

Your company is thinking about entering a new market. You have run a regression on the market demand, and the results are below. Quantity demanded is the dependent variable; price and income are the independent variables.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.94123

R Square 0.8924844

Adjusted R Square 0.87267

Standard Error 2.34546124

Observations 33

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 46.9989 2.0318 3.5745 0.0117 40.6292 216.962

Price -0.50288 0.24733 -2.8958 0.01067 -1.6386 0.2079

Income 0.310694 0.24733 -2.8958 0.01067 -1.6386 0.2079

Round the Intercept to a whole number. Round the coefficients to one decimal place.

Assume "Income" is 60,000 and it just enters the function as "60" (as we've been doing all semester). Determine the demand function for this regression AND THEN use it to get the inverse demand function. Which of the following is the inverse demand function?

a. P = 140 - 2.5*Q

b. P = 130 - 2*Q

c. P = 65 - (1/2)*Q

d. P = 90 - 2*Q