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Howie Jones, the owner of Smoky Mountain Hot Tubs, is facing a new problem. Although sale of the two hot tubs, Aqua-Spas and Hydro-Luxes, manufactured
Howie Jones, the owner of Smoky Mountain Hot Tubs, is facing a new problem. Although sale of the two hot tubs, Aqua-Spas and Hydro-Luxes, manufactured by his company have been brisk, the company is not earning the level of profits that Howie wants to achieve. Having established a reputation for high quality and reliability, Howie believes he can increase profits by increasing the prices of the hot tubs. However, he is concerned that a price increase might have a detrimental effect on demand, so Howie has engaged a marketing research firm to estimate the level of demand for Aqua-Spas and Hydro-Luxes at various prices. A market research firm developed a price curve to describe the relationship between prices and demand for the hot tubs. After analyzing the situation, the firm concluded that a reasonable price range for the hot tubs is between $1,000 and $1,500 and that within this range Howie can expect the demand for hot tubs in the next quarter to vary with price as follows
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