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The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. 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 price (P) of each model. NA = 185 -0.7PA + 0.55PB Ng = 282 +0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $230 and the price of model B is PB = $320. $93318 x (b) 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. PA = 270 PB 390 Need Help? Read It x x Watch It

The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. 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 price (P) of each model. NA = 185 -0.7PA + 0.55PB Ng = 282 +0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $230 and the price of model B is PB = $320. $93318 x (b) 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. PA = 270 PB 390 Need Help? Read It x x Watch It

Managerial Economics: A Problem Solving Approach
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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The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. 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 price (P) of each model. N = 185 - 0.7P, + 0.55P. Na = 282 + 0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is P, = $230 and the price of model B is Pa = $320. $ 93318 (b) 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. PA = 270 Рв - 390 Need Help? Read It Watch It Submit Answer
Transcribed Image Text:The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. 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 price (P) of each model. N = 185 - 0.7P, + 0.55P. Na = 282 + 0.08PA - 0.7PB (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is P, = $230 and the price of model B is Pa = $320. $ 93318 (b) 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. PA = 270 Рв - 390 Need Help? Read It Watch It Submit Answer
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