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Question: The Camera Shop sells two popular models of digital cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N ) and price (P) of each model:

NA = 195 - 0.6PA + 0.25PB

NB = 301 + 0.08PA - 0.5PB

a. Construct a model for the total revenue and implement it on a spreadsheet.

b. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10.

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