Border Snacks Inc. produces and sells jars of salsa, nacho chips, and queso dip. The company's marketing department estimated a linear demand function for Border's picante sauce:
QP = a + bPP + cM + dPN + ePQ
where QP is the number of jars of salsa sold per month, PP is the price of a jar of salsa, 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.
Border Snacks collected data on the demand variables from January 2010 to October 2017. The raw data can be found in the file SalsaSales_data.xls Attached
a. Use the raw data file to create an regression model of Border Snacks' demand for salsa. Write the equation of the estimated regression.
b. Are salsa and nacho chips complements or substitutes?
c. Are salsa and queso dip complements or substitutes?
d. In the market served by Border Snacks, the median income is currently $56,340. If Border Snacks Inc. sets the price of salsa at $4.99 per jar, the price of its nacho chips at $11.99 per bag, and the price of its queso dip at $6.99 per jar, calculate the sales forecast for number of salsa jars sold.
e. At the prices from the question above, if the price of nacho chips increases by 6.5%, by what percentage can Border Sales expect salsa sales to increase or decrease?