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Please read the case below and answer the following questions. Please show your calculations or attach a spreadsheet showing how you calculated each of the

Please read the case below and answer the following questions. Please show your calculations or attach a spreadsheet showing how you calculated each of the responses:

As the Apple Watch team planned for their US launch for the first quarter of 2015, an estimated monthly demand function for the US market was derived as shown in Figure 1:

QAW=-150,000-2400PAW+1520PGearS+1200PPebble-1200PiPhone6+44A

Where QAWis the quantity demanded of the Apple Watch per month, PAWis the price of the Apple Watch (dollars per unit), PGearSis the price of the Samsung Gear S watch (dollars per unit),PPebbleis the price of the Pebble Steel (dollars per unit), PiPhone6is the price of the mid-range iPhone 6 smartphone (dollars per unit), A is the quarterly targeted advertising budget for the Apple Watch (in thousands of Dollars per quarter). The estimated values are: PAW= $349, PGearS= $380, PPebble= $220, PiPhone6= $299, A = $15,500 . Calculate the following.

  1. Calculate the Monthly estimated Quantity demanded for Apple WatchQAW
  2. Use the relevant information from the estimated monthly demand function to calculate the elasticity values for each of the explanatory variables and interpret what the numbers mean.
  3. Construct the Demand equation, Inverse Demand Equation
  4. If the Marginal cost is assumed to be constant at $178, calculate and compare the Profit Maximizing Price and Quantity with the Revenue Maximizing Price and Quantity. Comment on your findings.

image text in transcribed
Apple Watch (A) - The Launch BAB344 - JULY 2017 The Apple Watch Pricing Strategy Demand for the Apple Watch The Apple Watch team contemplated their U.S. launch strategy for early 2015, the first quarter of Apple Watch sales, and estimated the weekly demand function for the U.S. market. (See Figure 1 below.)This function included prices of what the team determined to be the most significant competitors for the Apple Watch, in addition to other variables. Figure 1 QAW = -150,000 - 2400 PAW + 1520PGears + 1200 Pebble - 1200 Piphones + 44 A QAW is the quantity demanded of the Apple Watch per week. PAW is the price of the Apple Watch (dollars per unit). . PGears is the price of the Samsung Gear S watch (dollars per unit). Ppebble is the price of the Pebble Steel (dollars per unit). Piphones is the price of the mid-range iPhone 6 smartphone (dollars per unit). A is the quarterly targeted advertising budget for the Apple Watch (in thousands of dollars per quarter). As the team prepared for launch, they contemplated a scenario with the following variable values: PAW =$349, PGears =$380, Pebble =$220, Piphones =$299, A=$15.500. Regression analysis results showed the coefficient of determination to be 0.7581 and the standard error of the estimate to be 30,000. Cost Considerations According to an Apple Watch cost analysis by the Wall Street Journal of May 1, 2015, variable hardware and manufacturing costs per unit were estimated at $83.70. Cost estimates did not include intellectual property, royalties and licensing fees, shipping, logistics, and other channel

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