Assume SeatComfy Inc

question 19

Multiple Choice

Assume SeatComfy Inc.estimates the demand for its table chairs to be Q = 5,000 - 25P + 4I +10P_A - 15 P_T,where P = the price of SeatComfy's chairs; P_A = average price of competitors' chairs; P_T = price of tables; and I = average income of SeatComfy's customers.Which of the following is true?

• A)SeatComfy's chairs are inferior goods; SeatComfy's chairs and tables are complements,while SeatComfy's and competitors' chairs are substitutes.SeatComfy's sales decrease by 250 units for each $10 increase in their own price.
• B)SeatComfy's chairs are normal goods; SeatComfy's and competitors' chairs are substitutes,while SeatComfy's sales are not affected by the pricing decisions of table producers.SeatComfy's sales increase by 50 percent if the price decreases by $2.
• C)SeatComfy's chairs are normal goods; SeatComfy's chairs and tables are complements,while SeatComfy's and competitors' chairs are substitutes.SeatComfy's sales decrease by 25 units as price increases by $1.
• D)SeatComfy's chairs are normal goods; SeatComfy's chairs and tables are complements,while SeatComfy's and competitors' chairs are substitutes.SeatComfy's sales decrease by 250 units as price increases by $1.