The demand equation for the Widget Company has been estimated to be:
The demand equation for the Widget Company has been estimated to be:
Q = 20,000 + 10 I – 50P + 20 PC
where Q = monthly number of widgets sold, I = average monthly income, P = price of widgets, and PC = average price of competing goods.
a. If next month’s income is forecast to be 2,000, the price of competing goods is forecast to be $20, and the price of widgets will be set at $30, forecast sales.
b. What will sales be if the price is dropped to $20?
ANSWER
a. The forecast for sales is 38,900.
b. The forecast for sales will be 39,400.
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