The Radio Shop sells two popular models of portable sports radios - model A and model B. The sales of these products are not independent of each other in economics, these are called substitutable products, because if the price of one increases, sales of the other will increase). The store wants to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between quantity sold (N) and prices (P) of each model (with the subscripts A and B denoting products A and B respectively): Na=20.5-0.6PA+0.25PB Ng=28.8+0.08PA-0.5PB The spreadsheet RadioShop.xls (which is partially complete) gives a model for maximizing revenue. A two-way data table "format" has also been created for your benefit. Question: Approximately what the prices should be set for models A and B respectively so as to maximize revenue? O $27 & $39 O $29 & $37 $28 & $38 O $45 & $20 O $20 & $45 C J K L M N o A P_A B P_B D E F G H Intercept_A Intercept_B Slope AA Slope AB Slope BA Slope BB 20.5 28.8 -0.6 0.25 0.08 -0.5 1 2 3 4 5 N_A 20.5 N_B 28.8 6 PA 7 Revenue 20 21 22 23 24 25 26 27 28 29 30 8 PB 35 36 37 38 9 10 11 12 13 14 39 40 41 42 15 16 43 17 44 45 18 19 20 The Radio Shop sells two popular models of portable sports radios - model A and model B. The sales of these products are not independent of each other in economics, these are called substitutable products, because if the price of one increases, sales of the other will increase). The store wants to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between quantity sold (N) and prices (P) of each model (with the subscripts A and B denoting products A and B respectively): Na=20.5-0.6PA+0.25PB Ng=28.8+0.08PA-0.5PB The spreadsheet RadioShop.xls (which is partially complete) gives a model for maximizing revenue. A two-way data table "format" has also been created for your benefit. Question: Approximately what the prices should be set for models A and B respectively so as to maximize revenue? O $27 & $39 O $29 & $37 $28 & $38 O $45 & $20 O $20 & $45 C J K L M N o A P_A B P_B D E F G H Intercept_A Intercept_B Slope AA Slope AB Slope BA Slope BB 20.5 28.8 -0.6 0.25 0.08 -0.5 1 2 3 4 5 N_A 20.5 N_B 28.8 6 PA 7 Revenue 20 21 22 23 24 25 26 27 28 29 30 8 PB 35 36 37 38 9 10 11 12 13 14 39 40 41 42 15 16 43 17 44 45 18 19 20
