Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I received the linear regression results and know that the demand function is Q = 39.057 2.461(Price). We are also given this chart- Price Number
I received the linear regression results and know that the demand function is Q = 39.057 2.461(Price).
We are also given this chart-
Price | Number of Subscribers (Thousands) | Cost of License Fees (Thousands) | Divisional Sales, General and Administrative Costs (Thousands) | Total Revenue = Price x Number of Subcribers -(Thousands) | Total Cost = Cost of License + Div. Sales, Gen, and Admin. Costs (Thousands) | Profit = TR-TC (Thousands) |
$5.00 | 29.974 | $134.88 | $14.50 | $149.87 | $149.38 | $0.49 |
$5.50 | 29.256 | $131.65 | $14.50 | $160.91 | $146.15 | $14.76 |
$6.00 | 17.822 | $80.20 | $14.50 | $106.93 | $94.70 | $12.23 |
$6.50 | 22.657 | $101.96 | $14.50 | $147.27 | $116.46 | $30.81 |
$7.00 | 19.897 | $89.54 | $14.50 | $139.28 | $104.04 | $35.24 |
$7.50 | 16.671 | $75.02 | $14.50 | $125.03 | $89.52 | $35.51 |
$8.00 | 20.492 | $92.21 | $14.50 | $163.93 | $106.71 | $57.22 |
$8.50 | 20.000 | $90.00 | $14.50 | $170.00 | $104.50 | $65.50 |
$9.00 | 19.760 | $88.92 | $14.50 | $177.84 | $103.42 | $74.42 |
$9.50 | 17.123 | $77.05 | $14.50 | $162.67 | $91.55 | $71.11 |
$10.00 | 12.644 | $56.90 | $14.50 | $126.44 | $71.40 | $55.04 |
$10.50 | 12.785 | $57.53 | $14.50 | $134.24 | $72.03 | $62.21 |
$11.00 | 12.216 | $54.97 | $14.50 | $134.38 | $69.47 | $64.91 |
We are told that the current product sells for $9.75 / month, that there are 15,059 subscribers and revenue is 146,823.
We are asked to estimate price sensitivity at the current price and determine how low product should be price along with the potential revenue using the DEMAND EQUATION which is Q = 39.057 2.461(Price) from the linear regression ran on our data.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started