Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department

estimated a linear demand function for Border's picante sauce:

QF = a + bPF + cM + dPN + ePQ

where QF is the number of jars of picante sauce sold per month, PF is the price of picante sauce, PN is the price of a bag of nacho chips, PQ is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations:

a. Explain carefully and completely the meaning of the p-value for the parameter estimate on the price of nacho chips.

b. If Border Snacks Inc. sets the price of picante at $6 per jar, the price of its nacho chips at $3 per bag, and the price of its queso dip at $8 per jar, what is the predicted sales of picante sauce?

c. At the prices set in part b above, what is the price elasticity of demand for picante sauce?

d. How will a 2.4% fall in the price of nacho chips affect the demand for picante sauce?

... d. larger the responsiveness of quantity to changes in price. 12. Demand is said to be elastic when the: a. percentage change in quantity demanded is less than ...

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