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(Demand Estimation).
You run a firm that manufactures snowboards and sells snowboards in Colorado. You want to know how changing prices will affect your firm's revenues and profits. you decide to run a market experiment.
Between November and February, your firm charges $240 for its most popular kids snowboard. Over this period, you sell an average of 6,000 snowboards per month. In March, you raise the price to $260 per month. Your sales plummet to 1,000 snowboards per month between March and June.
Assuming that your firm's demand function is linear (i.e., , estimate your demand function.
1. Find the "b" parameter in the linear demand function. Answer for 1 is B= 250
2. Find the "a" parameter in the linear demand function. Answer for 1b is A= 66,000
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