One day, your uncle, the owner of electrical home appliance shop, obtained from a researcher the demand function for microwave oven. Qd= 120 - 1.07PM+ 0.76Po- 3.5Pc+ 5M + 0.5A, where Qdis the quantity microwave oven, PMis the price of a microwave oven, POis price of oven, PCis the price of the containers, M is income and A is advertising expense and asked you to explain the meaning of this equation.

(a) What general information can you obtain from this demand function? Try to explain to your father how he should interpret this equation. (5 marks)

(b) Your uncle wants to increase the total revenue from DVD players; do you think that you can provide him any suggestions right now? What sort of additional information, if any, is required to have a valid recommendation? (3 marks)