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THEORIES EMAND AND QUESTIONS 1. The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are
THEORIES EMAND AND QUESTIONS 1. The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are either sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for CPC's coupon books -5000-4000P0.02Pop+0.51+1.4 where Q is quantity, P is price (S), Pop is population, I is disposable income per household (S), and A is advertising expenditures (S) a. As a result of recent harsh economic condition there is a continuing exodus of people out of the economy. From the estimated demand function above comment on the effect of this situation on demand for CPC's coupon books., b. Recent research reveal income to rise sharply in the economy in the next few months. As a manager of Creative Publishing Company (CPC), how will you expect this to affect demand for CPC's coupon books. c. The board members of Creative Publishing Company (CPC) are strongly focused to reduce advertising expenditure as they claim it is reducing the demand for the firm's products. Briefly explain why you agree or disagree with their position. d. Estimate the total number of books bought when P S10, Pop- 1,000,000 persons, I- S30,000, and A S10,000 e. Derive and graph the demand curve faced by CPC f. Calculate the change in demand when CPC increases annual g. Calculate the change in demand when disposable household h. Calculate the change in demand when disposable household advertising expenditures from S10,000 to S15,000. income decreases from $30,000 to $15,000 income increases from S30,000 to S45,000 and annual advertising expenditures decreases from S10,000 to $4,000
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