menu
bartleby
search
close search
Hit Return to see all results
close solutoin list

South West Electronics Corporation (SWEC) designs high-tech business and residential security systems. The company’s marketing analyst has been assigned to analyze market demand for SWEC’s top-selling system, The Terminator. Monthly demand for The Terminator has been estimated as follows: q = 445 − 8 p + 25 A + 4.5 C + 6 Y Where q = Expected number of system sales per month p = Selling price for The Terminator (in dollars) A = Advertising (in thousands of dollars) C = SWEC’s only competitor’s average price (in dollars) Y = Disposable annual per capita income (in thousands of dollars) A recent survey of the potential customer market indicates that monthly advertising is $25,000, per capita disposable income is $80,000 per year, and the average price of the only competitor is $100. Based on this information, what is the monthly demand function p = f ( q ) for The Terminator? Find the elasticity of demand for The Terminator. If SWEC’s current price for The Terminator is $175, is demand elastic, inelastic, or unitary elastic? Is SWEC’s revenue for The Terminator maximized at the current price? Use the elasticity of demand found in part (b) to determine the price for The Terminator that would maximize SWEC’s revenue. Find the maximum revenue.

BuyFindarrow_forward

Mathematical Applications for the ...

11th Edition
Ronald J. Harshbarger + 1 other
Publisher: Cengage Learning
ISBN: 9781305108042

Solutions

Chapter
Section
BuyFindarrow_forward

Mathematical Applications for the ...

11th Edition
Ronald J. Harshbarger + 1 other
Publisher: Cengage Learning
ISBN: 9781305108042
Chapter 11.5, Problem 13E
Textbook Problem
1 views

South West Electronics Corporation (SWEC) designs high-tech business and residential security systems. The company’s marketing analyst has been assigned to analyze market demand for SWEC’s top-selling system, The Terminator. Monthly demand for The Terminator has been estimated as follows:

q = 445 8 p + 25 A + 4.5 C + 6 Y

Where q = Expected number of system sales per month

p = Selling price for The Terminator (in dollars)

A = Advertising (in thousands of dollars)

C = SWEC’s only competitor’s average price (in dollars)

Y = Disposable annual per capita income (in thousands of dollars)

A recent survey of the potential customer market indicates that monthly advertising is $25,000, per capita disposable income is $80,000 per year, and the average price of the only competitor is $100.

  1. Based on this information, what is the monthly demand function p = f ( q ) for The Terminator?

  2. Find the elasticity of demand for The Terminator.

  3. If SWEC’s current price for The Terminator is $175, is demand elastic, inelastic, or unitary elastic? Is SWEC’s revenue for The Terminator maximized at the current price?

  4. Use the elasticity of demand found in part (b) to determine the price for The Terminator that would maximize SWEC’s revenue. Find the maximum revenue.

This textbook solution is under construction.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started