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For several years, a large U.S. gift retailer has been purchasing a pen-and pencil set from an overseas manufacturer for $24 per set. The retailer's

For several years, a large U.S. gift retailer has been purchasing a pen-and pencil set from an overseas manufacturer for $24 per set. The retailer's policy is to use a 150 percent markup on such stationery-related gifts.

(a) Recently, a currency exchange-rate change has enabled the retailer to buy the pen-and-pencil set for only $18 per set. The retailer is considering passing along this cost decrease to his customers. If the retailer uses his usual markup for stationery-related gifts, calculate the new price the retailer would charge for this pen-and-pencil set.

(b) A buyer in the retailer's organization has taken the initiative to examine the historical data on this pen-and-pencil set. She obtained data for each of the past 12 years concerning the number of units sold during the year, the price during the year, and an index of economic activity in the retailer's market area during the year, and then carried out a regression analysis on these data. The means for each variable and the regression coefficients from the analysis are as follows:

image text in transcribed
Number of units sold per year 2,603 Price during the year 52.06 Index of economic activity for the year 118.7 104.1

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