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The demand function for bicycles in Super City has been estimated to be: Q = 2,000...

The demand function for bicycles in Super City has been estimated to be: Q = 2,000 - 5.5P + 15I Below is additional information concerning this Regression: Standard Error (SE) of the Intercept coefficient = 350 Standard Error (SE) of the price coefficient = 0.32 Standard Error (SE) of the Income coefficient = 0.70, R-Square = 0.64, Adjusted R-Square = 0.61, F-Statistic = 31.402, Q is quantity demanded per year, P is the price in dollars, and I is annual income in thousands of dollars.

A. Which of the two independent variables (if any) appears to be statistically significant (at the 5% level) in explaining bicycle sales?

B. What proportion of the variation in bicycle sales is explained by the regression equation?

C. When P = $150 and I = 15 (use 15 in the estimation and NOT 15,000 since income is already measured in thousands), calculate the Income elasticity of demand and characterize whether the product is normal or inferior.

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