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The economic analysis division of the Mapco Enterprises has estimated the demand function for its line of weed trimmers as ,000 + 0.4N - 350Pm + 90Ps where of new homes completed in the primary market area of the Mapco trimmer of its competitor's Surefire trimmer 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 such conditions?

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

c) What effect would a 30 % reduction in the number of new homes completed encompass on Mapco's sales (avoid the impact of the price cut of the Surefire trimmer)?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M923712

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