60 % (197 Review)
6.The economic analysis division of Mapco Enterprises has estimated the demand function
for its line of weed trimmers as
Qd=18,000 + 0.4N-350Pm + 90Ps
Where N= number of new homes completed in the primary market area
Pm= price of the Mapco trimmer
Ps= price of its competitorâ€™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 $55.
a. What sales forecast for 2010 under these conditions?
b. If its competitor cuts the price of the Surefire trimmer to $50, what effect will this have on Mapcoâ€™s sales?
c. What effect would a 30% reduction in the number of new homes completed have on Mapcoâ€™s sales (ignore the impact of the price cut of the Surefire trimmer)?
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