Question III. Exercise on Modeling (20 points) SHOW ALL YOUR WORK

Below you are given 12 observation on price and quantity demanded for your firm's

product.

PRICE	QUANTITY
18	247
16	294
11	429
13	375
15	328
17	279
20	198
21	173
12	405
19	222
14	352
10	414

(a) Estimate the demand curve for this firm using Excel (in other words, run a

regression where "quantity" is the dependent variable and "price" is the

independent variable). Write out the demand curve as an equation below. SHOW

YOUR EXCEL WORK.

(b) Use the regression estimated and the Microsoft solver to calculate the price that

maximizes Total Revenue (remember TR = Price times Quantity). What is the

price and total revenue? SHOW YOUR EXCEL WORK.

C) You are told that your product is produced in a manner that you have a Fixed Cost of $100 and an incremental cost (marginal cost) of $5 per unit. Using this information, the demand curve from above and the Solver, calculate the Price that Maximizes Profits