The Demand for Craftmatic Adjustable Beds Is Described by Q_c

question 89

Essay

The demand for Craftmatic Adjustable Beds is described by Q_c = P^-1.40_cI^-0.60P^0.20_mA^0.25, where Q_c is the number of Craftmatic Adjustable Beds demanded, P_c is the price of a Craftmatic Adjustable Bed, I is per capita income, P_m is the price of a battery-powered massage pillow, and A is the advertising budget.
a. If the marginal cost of producing a Craftmatic Adjustable Bed is $200, what is the profit-maximizing price?
b. Per capita income in the United States is forecast to rise by 3% next year. How will this impact Craftmatic's sales?
c. The price of battery-powered massage pillows suddenly fell by 10%. How will this impact Craftmatic's sales?

---

Definitions:

Nineteenth Century

A period extending from January 1, 1801, to December 31, 1900, marked by industrial revolution, colonial expansion, and major social reforms.

Right To Vote

The legal entitlement of citizens to participate in the electoral process, determining governmental leadership and influencing legislative decisions.

American Society

A diverse social structure in the United States characterized by a range of cultures, ethnicities, and social dynamics.

Noah Webster

An American lexicographer, textbook pioneer, English-language spelling reformer, political writer, editor, and author known for his dictionaries.