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The economic analysis division of Mapco Enterprises has estimated the demand function for its line of weed trimmers as
QD = 18,000 + 0.4N - 350PM + 90PS

In 2010, 15,000 new homes are expected to be completed in the primary market area. Mapco plans to charge $50 for its trimmer.

The Surefire trimmer is expected to sell for $55

a. What sales are forecast for 2010 under these conditions?

b. If its competitor cuts the price of the Surefire trimmer to $50, what effect will this have on Mapco's sales?

c. What effect would a 30 percent reduction in the number of new homes completed have on Mapco's sales (ignore the impact of the price cut of the Surefire trimmer)?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M92079676

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