A manufacturer of computer workstations gathered average monthly sales figures from its 56branch offices and dealerships across the country and estimated the following demand for itsproduct:Q = +15,000 - 2.80OP + 150A + 0.3Ppc + 0.35PM + 0.2PcThe variables and their assumed values areQ= QuantityP= Price of basic model = 7,000A = Advertising expenditures (in thousands) = 52Pae = Average price of a personal computer = 4,000Pm = Average price of a minicomputer = 15,000Pe = Average price of a leading competitor's workstation = 8,000Compute the elasticities for each variable. On this basis, discuss the relative impact that eachvariable has on the demand. What implications do these results have for the firm's marketing andpricing policies?

We are going to calculate elasticities to answer this question.

A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q = +15,000 - 2.80P + 150A + 0.3Ppc + 0.35PM + 0.2Pc The variables and their assumed values are Q= Quantity P= Price of basic model = 7,000 A= Advertising expenditures (in thousands) = 52 Pre = Average price of a personal computer = 4,000 Pm = Average price of a minicomputer = 15,000 Pe = Average price of a leading competitor's workstation = 8,000 Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies?

A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q = +15,000 - 2.80P + 150A + 0.3Ppc + 0.35PM + 0.2Pc The variables and their assumed values are Q= Quantity P= Price of basic model = 7,000 A= Advertising expenditures (in thousands) = 52 Pre = Average price of a personal computer = 4,000 Pm = Average price of a minicomputer = 15,000 Pe = Average price of a leading competitor's workstation = 8,000 Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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