Question
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.
- Calculate the Monthly estimated Quantity demanded for Apple WatchQAW
- 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.
- Construct the Demand equation, Inverse Demand Equation
- 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.
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