This problem requires the use of the filemayo.xls. It contains information on the sales of Kraft mayonnaise from Chicago area Jewel stores. The data is divided into two parts. The first part includes data Kraft sales, including total demand (SALES U) and total revenue (SALES $). This is translated into unit price information. Log data is also provided. The data runs weekly from 1991 through 1992, with some weeks missing.

The second set of data contains price information of the competitors, Hellman's and Miracle Whip. The prices in this data set are retail prices that Jewel grocery store offered to its buyers.

1. Develop a regression model to estimate the demand of Kraft's mayon- naise as a function of Kraft's price only. (Consider the three forms of regression model discussed in class.)Explainandjustifyyour choice of which of the three regression models to use. What is the estimate of the elasticity of demand for Kraft mayonnaise from your chosen model?
2. Repeat the above, but include the prices of the other two products. Now what is the estimate of the elasticity of demand for Kraft may- onnaise?
3. If one were to obtain different estimates of elasticity from these two models, which one should be used and why?