ABC corporation is a publisher of business dictionaries. the corporation hires an economist to determine the demand for its product, after month of hard work, the analyst tell the company that demand for the firms dictionaries (Qx) is given by the following equation:
Qx= 20000 - 10000 Px+ 10 P +1000 Pc
where Px is the price charged for ABC dictionaries, I is income per Capital and Pc is the price of books from competing publishers. Using this information, the company's managers want to
(i) Determine what effect a price increase would have on total revenues.
(ii) Evaluate how sale of dictionaries would change during a period of raising income.
(iii) Assess the probable impact if competing publishers raise their prices
Assume that the initial values of Px=$8, I=$18000 and Pc=$10