How a travel company has hired a management consulting

Reference no: EM13236937

A travel Company has hired a management consulting company to analyze demand in 26 regional markets for one of its major products: a guided tour to a particular country. The consultant uses data to estimate the following equation: Q = 1,500 - 4P + 5A +10I + 3PX where Q is the amount demanded per period; P is the price of the product in dollars; A is advertising expenditures in thousands of dollars; I is per capita income in thousands of dollars; and PX is the price of some other travel products offered by a competing travel company. a. Calculate the amount demanded for the product using the following data: P = $400; A = $20,000; I = $15,000; and PX = $500. b. Suppose the competitor reduced the price of its travel product to $400 to match the price of this firm's product. How much would this firm have to increase its advertising in order to counteract the drop in its competitor's price?

Reference no: EM13236937

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