Solve clearly if you are confident

QUESTION 1 Your boss looks worried. "We need to get our sales up quickly. The company is pursuing aggressive growth, and selling 500 units isn't enough. We have some flexibility to give discounts. Where does our price need to be to get, say, 500 additional units sold?" Fortunately, you have already analyzed past sales and prices, and you feel pretty confident about the demand function you estimated: Q = 1,500 - 12.5P, where Q is the company's sales, and P is the company's price. Your advice, to achieve sales of 1,000, is to set the price to ... 12.5 O 40 250 O 500 QUESTION 2 After assembling a dataset that includes your employer's, the Yay Company's, sales history and some relevant variables that might help predict sales, you ran a regression and arrived at the following forecast model: Q = 10,000 - 0.7P - 0.25PM - I, where Q is Yay's yearly sales, P is Yay's price, PM is the Meh Company's price, and I is the average annual consumer income after tax. Your boss is specifically interested in how sales depend on Yay's price. You explain that this information would be captured by a standard demand function. A review of the current price of the Meh Company and current consumer incomes shows that PM = 400 and I = 2,900. You inform your boss that the demand function is: O Q = 2,900 + 0.25PM O Q = 3,000 - 0.95P O Q = 6,600 + 0.25PM O Q = 7,000 - 0.7P