Problem
Suppose the demand curve of a good is P = a - bQ, with a > 0 and b > 0. When the unit prices are $1.9, 1.35, 1.25, 1.20, 0.95, 0.85, 0.73, 0.25, the quantities that are demanded (Qd) in the market are 1.5, 2.2, 4.4, 5.9, 6.5, 7.0, 8.8, and 10.1 units, respectively. That is,
|
Qd
|
Price
|
|
1.5
|
1.9
|
|
2.2
|
1.35
|
|
4.4
|
1.25
|
|
5.9
|
1.2
|
|
6.5
|
0.95
|
|
7
|
0.85
|
|
8.8
|
0.73
|
|
10.1
|
0.25
|
Under ordinary least square (OLS), use Excel or any statistical package to run a regression to estimate the coefficients of a and b, with P on the vertical axis and Q on the horizontal axis. You must show your results of regression. If you are not sure about how to achieve this, you should Google it and quote your reference(s).