Office Enterprises (OE) produces a line of metal office file cabinets. The company's economist, having investigated a large number of past data, has established the following equation of demand for these cabinets:

Q = 10,000 + 60B - 100P + 50C

where Q = Annual number of cabinets sold

B = Index of nonresidential construction

P = Average price per cabinet charged by OE

C = Average price per cabinet charged by OE's closest competitor

It is expected that next year's nonresidential construction index will stand at 160, OE's

average price will be $40, and the competitor's average price will be $35.

a. Forecast next year's sales.

b. What will be the effect if the competitor lowers its price to $32? If it raises its price to

$36?

c. What will happen if OE reacts to the decrease mentioned in part b by lowering its price

to $37?

d. If the index forecast was wrong, and it turns out to be only 140 next year, what will be

the effect on OE's sales?