Question #2 a. Consider the following nonlinear demand function, which is estimated for a price setting firm. The method of least-squares is used to estimate the parameters. (10 marks) @ =g P.b ME Er'd Where O is quantity demanded, P is price, M is income and PR is price of complement/close substitute. Using regression analysis, the model is estimated, and the results of the estimation are presented below. DEPENDENT VARIABLE: LNO OBSERVATIONS: 44 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 2.00 0.40 500 00001 LNP ] 0.44 250 0.0166 LWM 0.60 4,00 0.0003 LNPR ; 0.05 4.00 0.0003 i Before the nonlinear demand equation can be estimated using regression analysis, the demand eguation must be transformed into the following linear form: InQ= s iii. Are the parameter estimates statistically significant at the 5 percent level of significance? iii. The estimated value of a is equal to iv. Is this good a normal or inferior good? W Is this good a substitute or complement with respect to related good R? Wi Compute estimates of the following elasticities: a|The price elasticity of demand is b} The income elasticity of demand is c)The cross-price elasticity of demand is