Q1. A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships and estimated the following demand for its product:

Q= 15000 2.8P + 150A + 0.3 Ppc + 0.35 Pm + 0.2Pc

(5.234) (1.29) (175) (0.12) (0.17) (0.13)

R^2 = 0.68

Numbers in brackets are standard error of coefficient (SEC)

t statistics = b^/SEC

Q= Quantity

P = Price of basic model=7000

A= Advertising expenditures (in thousands) = 52

Ppc = Average price of a personal computer = 4000

Pm= Average price of a minicomputer = 15000

Pc= Average price of a leading competitors workstation = 8000

Compute the elasticities for each variable.

Conduct a t-test for the statistical significance of each variable.

Discuss the results of the t-tests in light of the policy implications mentioned