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The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases,
The Camera Shop sells two popular models of digital SLR cameras. The sales of these products are not independent; if the price of one increases, the sales of the other increases. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and price (P) of each model. NA = 185 - 0.5PA+ 0.35P8 Ng = 282 +0.08PA -0.7P8 (a) Construct a model for the total revenue and implement it on a spreadsheet. What is the profit (in dollars) predicted by your model when the price of model A is PA = $250 and the price of model B is pe = $370. $ 63285 (b) Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. PA = 380 PB = 460 X
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