Question:4.Bob's Underground, a limited liability corporation specializing in new rap artists (B.U. LLC, rap) has the following demand function:

where Q is the quantity demanded of the most popular product B.U. sells, P is the price of that product, M is income, and P_R is the price of a related product.The regression results are:

Adjusted R Square

0.8222

Independent Variables

Coefficients

Standard Error

t Stat

P-value

Intercept

-32.32

65.77

-0.491

0.626

P

-2.46

1.38

-1.813

0.079

M

0.008

0.001

6.045

9.53E-07

PR

-2.56

1.26

-2.025

0.051

a.Discuss whether you think these regression results will generate good sales estimates for B.U. LLC, rap.

Now assume that the income is $35,000, the price of the related good is $24, and B.U. chooses to set the price of its product at $21.

b.What is the estimated number of units sold given the data above?

c.What are the values for the own-price, income, and cross-price elasticities?

d.If P increases by 4%, what would happen (in percentage terms) to quantity demanded?

e.If M increases by 3%, what would happen (in percentage terms) to quantity demanded?

f.If P_R decreases by 5%, what would happen (in percentage terms) to quantity demanded?