Regression equation for Case 3.0:

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.957
R Square	0.915
Adjusted R Square	0.908
Standard Error	5.779
Observations	52
ANOVA
	df	SS	MS	F	Significance F
Regression	4	16947.86487	4236.9662	126.8841	1.45976E-24
Residual	47	1569.442824	33.392401
Total	51	18517.30769
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	39.08190	15.31261	2.55227	0.014012	8.27693	69.88687
X-Price	-7.37039	0.98942	-7.44921	1.71E-09	-9.36084	-5.37994
Y-Price	-3.42813	0.21342	-16.06289	1.03E-20	-6.10796	-4.74831
Z-Price	4.05067	0.33949	11.93173	7.95E-16	3.36771	4.73363
Income	0.00288	0.00038	7.57448	1.11E-09	0.00212	0.00364

Questions and analysis:

5.    Suppose the marginal cost of model X is a constant $5 per unit. Find the profit maximizing price and quantity for the producer of model X, once again assuming the price of Y is $15, the price of Z is $24, and household income is $42,000.

Optimal Price: __________

Optimal Quantity: ___________

6.    Calculate cross price elasticity between the model X and the price of Y when own price is $10, the price of Y is $15, the price of Z is $24, and household income is $42,000. Suggest a strategic response: how exactly should the producer of model X respond when the producer of Y raises its price, say by $1?

Cross Price Elasticity = _______________

Strategic response: