Q6-Q8. Price (p) Number of customers with this RP (RP = p) $0.01 2 $0.50 $1.00 6 $1.50 8 $2.00 10 $2.50 12 $3.00 10 $3.50 8 $4.00 6 $4.50 $5.00 Note: RP = Reservation Price. Given the data set in the table, estimate the demand curves using four different functions: (1) the linear function: d(p) = D+mp, D>0, m 0, &0, a ER, b 0, a > 0, B >0. p" + a Q6 (2pt). Which function is the best to fit the data based on the sum of squared residuals? (Hint: for the logit function, use C=80, a =2, b=-1 for the initial values; for the power function, use D=80, a =20, B =3 for the initial values.) (A) Linear function (B) Constant elasticity function (C) Logit function (D) Power function 6 MARK5829 Quiz 2: T2 2022 Q7 (2pt). Suppose that the firm currently charges $2. Using the best estimated price-response function in Q6, calculate the price elasticity of demand at the $2 price. (Hint: you can consider a scenario where the store increases the price to $2.01.) Find the most appropriate suggestion based on the price elasticity of demand. (A) The firm should increase its price because the price elasticity is greater than -1. (B) The firm should decrease its price because the price elasticity is greater than -1. (C) The firm should increase its price because the price elasticity is lower than -1. (D) The firm should decrease its price because the price elasticity is lower than -1