Questions 3a-d

3. Success Apartments owns 10 apartment buildings in a college town which it rents exclusively to students. The apartments in each building have comparable floor plans, but some buildings are closer to campus than others. The owners of Success Apartments have data from last year on the number of apartments rented, the rental price (in dollars), and the amount spent on advertising (in hundreds of dollars) at each of the 10 apartments. These data, along with the distance (in miles) from each apartment building to campus, are presented in the table below. Observation Quantity(Q) Price(P) Ad(A)'000 Distance (D) 1 28 250 12 12 2 69 400 24 4 3 43 450 15 5 4 32 550 31 6 5 42 575 34 7 6 72 375 22 3 7 66 375 12 4 8 49 450 24 7 9 70 400 22 5 10 60 375 10 4 a. Use excel regression to estimate the demand function for Success Apartment's rental units (attach the output of the regression estimate) and write the equation of the demand function. b. Are the coefficients of the three determinants of quantity of rental units (Price, Advertising, and Distance) statistically significant at the 5% significance level? How do you know? c. What is the estimated R2 and its interpretation? d. Based the estimated demand function for rental units, find the price elasticity of demand for rental units at the average values of Q, P, A, and D [Hint: Use Ep = b(P/Q, see 3.6, page 48 in the textbook for calculating the price elasticity of demand). Should the manager increase, or lower the rental price to increase its operating revenue? Justify your ans