The Demand for Craftmatic Adjustable Beds Is Described by

question 13

Essay

The demand for Craftmatic Adjustable Beds is described by
Q_c = P^-1.60_cI^-0.80P^1.20_mA^0.25, where Qc 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 impace Craftmatic's sales?

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Definitions:

Overtime

Additional time worked by an employee beyond the normal or legally defined working hours, usually compensated at a higher pay rate.

Subcontracting

The practice of assigning parts of a project or job to outside companies or specialists to capitalize on efficiency and expertise.

Regular Time

The standard hours that an employee is scheduled to work, excluding overtime or abnormal schedules.

Aggregate Planning

A process by which a company determines optimal levels of capacity, production, subcontracting, inventory, stockouts, and even pricing, over a specified time period.