Gecko Insurance is planning to offer a new type of combined auto and renters insurance product. Their chief statistician, Albert Gorithm, estimated the parameters of Basss diffusion model for two potential markets. The results follow:

Market 1: St = 2650 +.057Yt-1 -.00022Y^2t-1

Market 2: St=14380 -.036Yt-1 - .00065Y^2t-1

Remember that the general equation for sales in any time period t is:

St=p0m+(q-p0(Y-1 - (q/m)Y^2t-1

Where S (t) = sales (000s) in period t; p = coefficient of innovation; q = coefficient of imitation; m= sales potential or saturation level; Y_t-1= total people who have ever bought (cumulative sales) by end of period t-1

1. Without doing any calculations, which market would you guess had the higher sales potential m? Briefly explain your answer.
2. Draw the shape of the predicted sales curve for each market and explain your answer in each case. Show the starting sales level (period 1) and draw the shape carefully.
3. What diffusion effect is driving sales in market 1? What is driving sales in market 2? (Hint: It is either the innovation effect p or the imitation effect q). Explain your answer.