1. The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for CPC's coupon books: Q = 5,000 - 4,000P + 0.02Pop +0.251 + 1.5A, where Q is quantity, P is price ($), Pop is population, I is disposable income per household ($), and A is advertising expenditures ($). a. Determine the demand faced by CPC in a typical market in which P = $10, Pop = 1,000,000persons, I = $60,000, and A = $10,000. %3D b. Calculate the level of demand if CPC increases annual advertising expenditures from $10,000 to $15,000.

1. The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for CPC's coupon books: Q = 5,000 - 4,000P + 0.02Pop +0.251 + 1.5A, where Q is quantity, P is price ($), Pop is population, I is disposable income per household ($), and A is advertising expenditures ($). a. Determine the demand faced by CPC in a typical market in which P = $10, Pop = 1,000,000persons, I = $60,000, and A = $10,000. %3D b. Calculate the level of demand if CPC increases annual advertising expenditures from $10,000 to $15,000.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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