The marketing department at XYZ Company has found that, when Product ABC is sold at a price of pp dollars per unit, the number xx of Product ABC sold is given by the demand equation x=300−15px=300-15p. (a) Find the model that expresses the revenue RR as a function of the price pp. (Note that R=xpR=xp, the unit price times the number of units sold)

The marketing department at XYZ Company has found that, when Product ABC is sold at a price of pp dollars per unit, the number xx of Product ABC sold is given by the demand equation x=300−15px=300-15p. (a) Find the model that expresses the revenue RR as a function of the price pp. (Note that R=xpR=xp, the unit price times the number of units sold)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 2E

See similar textbooks

Similar questions

ATV is a price-setting firm and estimates the demand for its cement using a demand function in the linear form: Q = f( P, M, PR) where Qc = demand for cement/month (in yards) Pc = the price of cement per yard, M = country’s tax revenues per capita, and PR = the price of asphalt per yard. DEPENDENT VARIABLE Qc R- SQUARE P- VALUE ON F 64 0.8093 0.0001 INDEPENDENTVARIABLE PARAMETER ESTIMATE STANDARD ERROR T-RATIO P-VALUE INTERCEPT 8.20 4.01 2.04 0.0461 PC -3.54 1.64 -2.16 0.0357 M 0.64287 0.19 3.38 0.0014 PA 0.7854 0.38 2.07 0.0439 10. Write the resulting regression equation.
The multivariate demand function below will be needed for questions 12-18. Setting: Grapple, Inc. is a leading seller of laptop personal computers. However, they want to become a leading tablet seller, too. Your marketing department, aided by your economics staff, has estimated a function to help you in the quest for market leader in tablets. The variables are defined after the function. Qg = the number of Grapple tablet computers demanded per week. Pg = the price of each new Grapple tablet (in $). Ph = the price of each Hewpaq tablet (in $). Pr = the price of each Ronova tablet. Pdv = the price to equip a tablet with Holographic digital video (in $, this is an upgrade option that enables three-dimensional graphics on a tablet. Two-dimensional graphics is standard equipment). Psc = the price of various screen sizes (in $, a 8 inch is standard, but upgrade options are 10 inch extra sharp, 12 inch, 12 inch extra sharp, Each also has a touch-screen option. The upgrades…
For each of the four models above calculate the elasticity of gas price to oil price; indicate what determines its value if it is not constant; compute its numerical value assuming both variables equal their sample average. The sample averages of each variable are the following gas = 4 . 2 0 8 oil = 5 7 . 9 4 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for children. The following (multiplicative exponential) demand function is being used: QD=6,280 P(−1.85)A2.05N2.70QD=6,280 P−1.85A2.05N2.70 where QDQD = quantity demanded, in 10-oz boxes PP = price per box, in dollars AA = advertising expenditures on daytime television, in dollars NN = proportion of the population under 12 years old, in percent What is the point price elasticity of demand for Tweetie Sweeties? 2.05 2.70 -0.90 -1.85 What is the advertising elasticity of demand? 0.76 -1.85 2.70 2.05
Consider the file demand.xlsx which contains the demand observed for different levels of pricing for a product. Produce a scatter plot of demand vs price. Use trendline to fit a linear and a power function to estimate demand as a function of price. price demand 18.05 1490 13.17 4094 15.17 2784 16.83 2888 18.64 1334 11.95 3573 14.88 2961 17.04 1790 14.15 3664 17.56 1632 20.1 1564 10.21 5583 14.1 2767 13.64 3686 11 3002 20.16 1316 13.47 3661 15.77 479 17.7 1612 15.58 3287 14.33 3750 18.91 1245 20.77 1415 11.83 4643 12.32 3942 20.13 1558 12.71 4045 16.04 2843 13.99 3332 17.97 2373 12.61 3357 13.66 2884
A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q = +15,000 - 2.80P + 150A + 0.3Ppc + 0.35Pm + 0.2Pc The variables and their assumed values are Q = Quantity P = Price of basic model = 7,000 A = Advertising expenditures (in thousands) = 52 Ppc = Average price of a personal computer = 4,000 Pm = Average price of a minicomputer = 15,000 Pc = Average price of a leading competitor’s workstation = 8,000 Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm’s marketing and pricing policies?
Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: (SEE IMAGE) Write down the estimated demand equation Interpret the coefficients and R2 value Describe any three managerial decisions that can be applied by the manager from the estimated demand function
A company produces and sells a consumer product and thus far has been able to control the volume of the product by varying the selling price. The company is seeking to maximize its net profit. It has been concluded that the relationship between price and demand, per month, is approximately D = 800 - 8p, where p is the price per unit in dollars. The fixed cost is $1,000 per month, and the variable cost is $20 per unit. Obtain the answer mathematically to the following questions: a. What is demand that will maximize revenue per month and the maximum revenue b. What is the optimal number of units that should be produced and sold per month? c. What is the maximum profit per month? d. What are the breakeven sales quantities and the range of profitable demand (volume)?
Demand for Magnum Ice Cream is given by an equation Q = - 5,000 – 40P + 20Px + 5I + 0.2A Where, Q = Quantity of Magnum demanded, P = Price of Magnum Ice Cream, Px = Price of Walls Ice Cream, I = Per Capita Income and A = advertisement expenditure. State and elaborate the key steps for analyzing regression results of demand. Assume P = Rs 500, Px = Rs 600, I = Rs 5,000 and A = 10,000 (Rs in thousands). Calculate elasticities for each of the variables: Price Elasticity of Demand Cross Price Elasticity of Demand Income Elasticity of Demand Advertisement Elasticity 3. How does each of the elasticities help in managerial decision making? Given these estimates should Magnum consider reducing its price to increase market share? Explain.
A company produces and sells a consumer product and thus far has been able to control the volume of the product by varying the selling price. The company is seeking to maximize its net profit. It has been concluded that the relationship between price and demand, per month, is approximately D = 500 - 5p, where p is the price per unit in dollars. The fixed cost is $1,000 per month, and the variable cost is $20 per unit. Obtain the answer mathematically to the following questions: a.What is the optimal number of units that should be produced and sold per month? b. What is the maximum profit per month? c. What are the breakeven sales quantities and the range of profitable demand volume?
Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $172,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $42. Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand = 4,000 − 6p, where p is the price of the e-book. (a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). $ (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) $ (c) Use a data table that varies…
Suppose you have been hired by a research firm trying to understand the market for Widgets (a hypothetical product). Your analysis of the data indicates that the Demand curve for Widgets is estimated to be linear and given by equation Qd = 150 – 3P and the Supply curve for Widgets appears to be linear as well and is estimated as Qs = 2P – 20. Graphically draw these two curves, labeling all relevant points (such as intercepts for each line) on the horizontal and vertical axes.