One of the leading washer and dryer manufacturers has estimated the following demand equation based on the data from its 47 branch offices and dealerships across the country:

Q=12,000 - 20P +120A + 15Pc -100Ac+80I -20Pd

(6400) (9)(80)(7)(64)(52)(9)

R^{2 =} 0.72F = 20.15

The variables and their assumed values are

Q = Quantity

P = Price of basic model = 500

A =Advertising expenditures = 50

=Average price of the competitor's product = 600

= competitor's advertising expenditures = 30

I = per capita income = 75

price of the dryer = 600

a. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies?

b.How concerned the company should be about the impact of a recession on its

sales?Explain.