6 The Economic Analysis Division Of Mapco Enterprises Has Estimated The Demand Funct 1084961

6.The economic analysis division of Mapco Enterprises has estimated the demand function

for its line of weed trimmers as

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Qd=18,000 + 0.4N-350Pm + 90Ps

Where N= number of new homes completed in the primary market area

Pm= price of the Mapco trimmer

Ps= price of its competitor’s Surefire trimmer

In 2010, 15,000 new homes are expected to be completed in the primary market area.

Mapco plans to charge $50 for its trimmer. The Surefire trimmer is expected to sell $55.

a. What sales forecast for 2010 under these conditions?

b. If its competitor cuts the price of the Surefire trimmer to $50, what effect will this have on Mapco’s sales?

c. What effect would a 30% reduction in the number of new homes completed have on Mapco’s sales (ignore the impact of the price cut of the Surefire trimmer)?