Your company, which specializes in running shoes for men who are growing increasingly follicly-challenged (BalderDash), has the following demand function:

Q = a + bP + cM + dR

where Q is the quantity demanded of BalderDash's most popular shoes, P is the price of that product, M is consumer income, and R is the price of a related product. The regression results are:

Q = 21055.04 - 83.912P + 0.0266M -16.6R

Adjusted R Square	0.7796
Independent Variables	Coefficients	Standard Error	t Stat	P-value
Intercept	21,055.04	1428.27	14.74	8.1E-16
P - Price	-83.912	19.079	-4.398	0.000
M - Income	0.0266	0.013	2.064	0.047
R - Price Related Prod.	-16.6	10.664	-1.556	0.129

1. Discuss whether you think these regression results will generate good sales estimates for BalderDash.

The regression results indicate that the model has a reasonably high Adjusted R Square (0.7796), suggesting that around 77.96% of the variability in the quantity demanded is explained by the independent variables. The model seems to provide reasonably good sales estimates, but the non-significant coefficient for the price of the related product raises some concerns about the robustness of its impact

Now assume that the income is $69,100, the price of the related good is $39, and BalderDash chooses to set the price of its product at $54.

1. What is the estimated number of units sold given the data above? (round to nearest unit; no decimals)

Q = 21055.04 - 83.912P + 0.0266M -16.6R

Q = 21055.04 - 83.912(54) + 0.0266(69100) - 16.6(39)

Q = 21055.04 - 4531.248 + 1838.06 - 647.4

Q = 17714.452

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

E = %change Q / %change P or = (change Q / average Q) / (change P / average P)

Em = %changeQd / %changeM and Exr = %change Qx/ %changePr

E =

EM =

ER =

1. If P increases by 6%, what would happen (in percentage terms) to quantity demanded?

1. If M increases by 2%, what would happen (in percentage terms) to quantity demanded?

f. If R decreases by 3%, what would happen (in percentage terms) to quantity demanded?