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3. Teri owns a limestone quarry north of Kingston near Frontenac Park. The extraction of limestones from her quarry takes time and requires some planning, so it happened a few times that she could not meet the demand for her limestones. Teri therefore decided to hire you as a consultant to help her predicting the future demand for her limestones. Teri provides you with the sales data for the last three years (available on the course website). a) Consider the following linear demand function for Teri's limestones: Qr = a+by . Pr + bs . Ps where Qr: sales/month of Teri's limestones (measured in tons) Pr: average price of a ton of Teri's limestones Ps: average price of a ton of limestones from Stone-Heaven Inc. (a competitor). (i) Using Excel, estimate this linear demand function for Teri's limestones. Include the regression results from Excel in your assignment. (Note: For all estimated coefficients carry 1 non-zero digit to the right of the decimal point.) (3 points) 3 (ii) Briefly explain the economic meaning of the estimated coefficients by and by. (Hint: In your answer refer to the actual values of the coefficients.) (2 points) b) Now consider the following constant elasticity demand function for Teri's limestones: QT = a . POT . pbs Repeat (i) and (ii) from part (a) for this constant elasticity demand function. (Note: For all estimated coefficients carry now 4 non-zero digit to the right of the decimal point.) (6 points) c) Which demand function (i.e., the linear demand function from part (a) or the constant elasticity demand function from part (b)) better describes the actual demand for Teri's limestones? Briefly explain. (1 point) d) Using the appropriate demand estimation, predict the total demand for Teri's limestones next month (i.e., time = 37), assuming that Teri will then charge $250 for one ton her limestones. Moreover, you believe that Stone-Heaving Inc. will sell its limestones for $220 next month. (2 points)