In the example 7.1 Pricing Decision at Madison, which is on chapter 7 slides 24-34, two points on the demand curve were given. Suppose three additional points are estimated by Madison: (1) demand of 460 when price is $65, (2) demand of 355 when price is $75, and (3) demand of 275 when price is 85.

a) With these new points and the original two points, estimate the best-fitting linear demand curve; do the same for the best-fitting constant elasticity demand curve.

b) Suppose we decide to use the constant elasticity demand curve for prediction. What price will Madison charge to maximize the total profit?

Please show all work clearly in excel. Please provide formulas for each step.

Here are the points from the example referred to:

Demand Price $70 $80 400 300