The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC

Question:

The Creative Publishing Company (CPC) is a coupon book publisher with markets in several southeastern states. CPC coupon books are sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for CPC’s coupon books:

Q = 5,000 - 4,000P + 0.02Pop + 0.25I + 1.5A,

where Q is quantity, P is price ($), Pop is population, I is disposable income per household ($), and A is advertising expenditures ($).

A. Determine the demand faced by CPC in a typical market in which P = $10, Pop = 1,000,000 persons, I = $60,000, and A = $10,000.

B. Calculate the level of demand if CPC increases annual advertising expenditures from $10,000 to $15,000.

C. calculate the demand curves faced by CPC in parts a and B.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...