The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $200, Camera B Price: $300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 195 - 0.6PA + 0.25PB NB = 301 + 0.08PA - 0.5PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max revenue occurs at Camera A price of $ Max revenue occurs at Camera B price of $
The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $200, Camera B Price: $300). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 195 - 0.6PA + 0.25PB NB = 301 + 0.08PA - 0.5PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max revenue occurs at Camera A price of $ Max revenue occurs at Camera B price of $
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter12: More Realistic And Complex Pricing
Section: Chapter Questions
Problem 9MC: After running a promotional campaign, the owners of a local hardware store decided to decrease the...
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