Asked by Radhika Singh on Jul 24, 2024
Verified
The demand for Craftmatic Adjustable Beds is described by
Qc P-1.40cI-0.60P0.20mA0.25, where Qc is the number of Craftmatic Adjustable Beds demanded, Pc is the price of a Craftmatic Adjustable Bed, I is per capita income, Pm is the price of a battery-powered massage pillow, and A is the advertising budget.
a.If the marginal cost of producing a Craftmatic Adjustable Bed is $200, what is the profit-maximizing price?
b.Per capita income in the United States is forecast to rise by 3% next year.How will this impact Craftmatic's sales?
c.The price of battery-powered massage pillows suddenly fell by 10%.How will this impact Craftmatic's sales?
Profit-Maximizing Price
The pricing point at which a firm can achieve the highest possible profit, given the demand and cost conditions.
Craftmatic Adjustable Beds
A brand of electric beds that can be adjusted to various positions for comfort and health benefits.
Per Capita Income
measures the average income earned per person in a given area within a specified year.
- Assess the effects of variations in income on consumer demand for products.
- Understand the impact of advertising and budget changes on product demand.
Verified Answer
BT
Briamber TerrellJul 31, 2024
Final Answer :
a.$700.
b.Demand will decrease by 1.8%.
c.Demand will decrease by 2%.
b.Demand will decrease by 1.8%.
c.Demand will decrease by 2%.
Learning Objectives
- Assess the effects of variations in income on consumer demand for products.
- Understand the impact of advertising and budget changes on product demand.