Really great job. Thank you so much. I really love it. Thank you so much for all of your help.
Analysis (any type)
02/10/2021
Bob’s Underground, a limited liability corporation specializing in new rap artists (B.U. LLC, rap) has the following demand function:
Q=a+bP+cM+dRQ=◂+▸a+bP+cM+dR
where QQ is the quantity demanded of the most popular product B.U. sells, PP is the price of that product, MM is income, and RR is the price of a related product. The regression results are:
Adjusted R2R2 0.7711
Independent VariablesCoefficientsStandard Errort-statP-value
Intercept-25.99569.306-0.3750.710081
P-4.5821.463-3.1330.003691
M0.00630.0023.9480.000405
R3.091.2192.5310.016481
Question 1
Do you think these regression results will generate good sales estimates for B.U. LLC, rap?
Select one:
a. Yes; the parameter estimates have expected signs, the individual coefficients (besides the intercept) are statistically significant at the 5% level, and the R2R2 is high.
b. Yes, except that the R2R2 is too low to be convincing. The rest of the results (p-values, expected signs) are satisfactory.
c. No; the estimated coefficient for R2R2 should be positive, not negative.
d. No; though the R2R2 is good and the variables have the expected signs, the estimated coefficients are not statistically significant at the 10% level.
__________________
Now assume that the income is $35,000, the price of the related good is $17, and B.U. chooses to set the price of its product at $15.
Question 2
What is the estimated number of units sold given the data above? (Round to the nearest single unit; i.e., no decimals).
Answer: _________________?
Question 3
What are the values for the own-price (EE), income (EMEM), and cross-price (EXR◂◽.▸EXR) elasticities?
Select one:
a. E=−0.23E=−0.23, EM=−1.67◂=▸EM=−1.67, EXR=1.21◂◽.▸EXR=1.21
b. E=−0.385E=−0.385, EM=1.237EM=1.237, EXR=0.295◂◽.▸EXR=0.295
c. E=−1.22E=−1.22, EM=2.09EM=2.09, EXR=−0.87◂◽.▸EXR=−0.87
d. E=−4.582E=−4.582, EM=0.0063EM=◂#▸0.0063, EXR=3.085◂◽.▸EXR=3.085
Question 4
If PP increases by 4%, what would happen (in percentage terms) to quantity demanded?
Select one:
a. QQ changes by 4%×−0.386=−1.54%4%◂=▸×−0.386=−1.54%
b. QQ decreases by 4%4%.
c. QQ decreases by 0.478%0.478%.
d. QQ increases by 4%×−4.582=−0.183%4%◂=▸×−4.582=−0.183%
Question 5
If MM increases by 3%, what would happen (in percentage terms) to quantity demanded?
Select one:
a. QQ increases by 3%×3%=0.09%◂,▸3%×3%=0.09%.
b. QQ falls by 0.6%.
c. QQ increases by 3%×1.239=3.72%◂,▸3%×1.239=3.72%.
d. QQ decreases by 3%×−0.478=−0.0143%◂=▸×−0.478=−0.014.
Question 6
If RR decreases by 5%, what would happen (in percentage terms) to quantity demanded?
Select one:
a. QQ falls by 1.48%.
b. QQ falls by 5%×3.085=0.154%◂,▸5%×3.085=0.154%.
c. QQ decreases by 6.22%.
d. QQ increases by 28.4%.
Really great job. Thank you so much. I really love it. Thank you so much for all of your help.
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