Pricing and Production Decisions Poolvac, Inc. manufactures and sells a single product called the "Sting Ray," which is a patent-protected automatic cleaning device for swimming pools. Poolac's Sting Ray accounts for 65 percent of total industry sales of automatic pool cleaners. Its closest competitor, Howard Industries, sells a competing pool cleaner that has captured about 18 percent of the market. Six other very small firms share the rest of the industry's sales. Using the last 26 months of production and cost data, Poolac wishes to estimate its unit variable costs using the following quadratic specification: AVC -+bQ+cQ The monthly data on average variable cost (AVO, and the quantity of Sting Rays produced and sold each month (0) are presented in the table below. Poolva also wishes to use its sales data for the last 26 months to estimate demand for its Sting Ray. Demand for Sting Rays is specified to be a linear function of its price (P), average income for households in the U.S. that have swimming pools (Mars), and the price of the competing pool cleaner sold by Howard Industries [P]: Qd = d+P+Movg.PH The table below presents the last 26 months of data on the price charged for a Sting Ray (P), average income of households with pools (MAVG), and the price Howard Industries charged for its pool deaner (PH: obs 1 2 3 AVC 115 124 279 279 304 127 5 PH 174 174 199 199 199 199 199 199 108 127 108 111 107 6 7 8 9 10 MAVG 58115 58115 58115 56415 56415 56415 57965 57965 57965 57715 57715 57715 58365 114 249 Q 1635 1652 1283 1319 1401 1366 1359 1300 1289 842 951 1226 1064 1080 1210 1296 1247 699 1106 79 125 845 991 1316 1364 1207 249 249 224 224 224 224 249 249 58365 119 120 111 113 110 110 108 122 132 122 145 158 122 133 129 110 120 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 304 304 304 304 329 354 354 329 329 329 329 329 329 379 354 479 479 379 354 324 324 324 249 58365 59100 59100 59100 59715 59715 59715 60915 60915 60915 62465 62465 249 374 374 249 249 219 219 219 1 on the region in Teito estimate the rear wariable containing as eest picance of the weet water geves per to comment on the other b and marginal function(TVC, AVC and a TV there in toate the demand function to sing an te the powe Herreres horaire este reteres The manager. I want per and home in the US exced to be somert Polecure Song Rayt your recommended eestimuleerunder of its com expect to a wall motorotalcout, and prote 10 for the most complicemente In the promotion 25 percent price utwuld be predicted to ineren, der demended $ of Police Stay Give your recommended the 4 of 4 TO In the proming station in question as decreasedongan for the procession 3.come one that wont Aberce precede 1 botol become anche per le told costrom 0 to Scharwould the Pows wanted to lead the At this price, cut woes
