Question: Gurgling Springs Inc is a bottler of natural spring water

Gurgling Springs, Inc. is a bottler of natural spring water distributed throughout the New England states. Five-gallon containers of GSI spring water are regionally promoted and distributed through grocery chains. Operating experience during the past year suggests the following demand function for its spring water:
Q = 250 - 100P + 0.0001Pop + 0.003I + 0.003A

Where Q is quantity in thousands of five-gallon containers, P is price ($), Pop is population, I is disposable income per capita ($), and A is advertising expenditures ($).
A. Determine the demand curve faced by CPI in a typical market where P = $4, Pop = 4,000,000 persons, I = $50,000 and A = $400,000. Show the demand curve with quantity expressed as a function of price, and price expressed as a function of quantity.
B. Calculate the quantity demanded at prices of $5, $4, and $3.
C. Calculate the prices necessary to sell 1,250, 1,500, and 1,750 thousands of five gallon containers.

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  • CreatedJuly 29, 2013
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