How much would the firm have to increase its advertising

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Reference no: EM13222532

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 equation for the quantity demanded is

Q = 1500 - 4p + 5A + 10I + 3Px
Where Q = amount of the product demanded
P = Price of the product in dollars
A = advertising expenditure in dollars
I = Income in dollars
Px = price of other travel products that are provided by a competing travel company.

a. Determine the demand curve for this product using the following data.
P = $400, A = $20,000, I = $15,000, Px = $500

b. Suppose people's income drops to $10,000. How much would this firm have to increase its advertising in order to counteract the drop in income?

Reference no: EM13222532

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