The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales S vary jointly with disposable personal income Y and the population between ages 15 and 40, Z, and inversely with the price of the snowmobiles P. based on past data, the best estimate of this relationship is S= k YZ P Where k is been estimated (with past data) to equal 100.

a. If Y = $11,000, Z= $1,200, and P= $20,000, what value would you predict for S?

b. What happens if P is reduced to $17,500?

c. How would you go about developing a value for k?

d. What are the potential weaknesses of this model?