Question
The following demand function for KMC product was estimated Qda=-1.5Pa+3.0Pb+1.8Y+0.04A+40C Where Qda is annual demand for KMC Products Pa is average annual price for KMC
The following demand function for KMC product was estimated
Qda=-1.5Pa+3.0Pb+1.8Y+0.04A+40C
Where Qda is annual demand for KMC Products
Pa is average annual price for KMC product
Pb is average annual price for a competing firm's product
Y is income per capita
C is index for credit availability
A is annual advertising expenditure
Assume that Pa=Kes.2, 666,000; Pb=Kes.2, 100,000
Y=Kes. 40,000; C=1.0; A=Kes 3,500,000 At the current price level, what effect would an increase in price of the firm's
products have total revenue? Support your answer. (3 marks)
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