2- A manufacturer of a computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its products:
Q = +15000 – 2.80P + 150A + 0.3Ppc + 0.35Pm +0.2Pc
The Variables assumed values are :
Q = Quantity , P = Price of basic model = 7,000
A = Advertising expenditures in thousands = 52 ,
Ppc= Average price of a personal computer = 4,000
Pm = Average price of mini computer = 15,000 ,
Pc = Average price of leading competitor workstations = 8,000
•Compute the elasticity for each of the variables. On this basis discuss the relative impact that each variable has on the demand. What implications do the results have for the firm’s marketing and pricing policies?
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