I received the linear regression results and know that the demand function is Q = 39.057 – 2.461(Price). We are also given this chart-

Price	Number of Subscribers (Thousands)	Cost of License Fees (Thousands)	Divisional Sales, General and Administrative Costs (Thousands)	Total Revenue = Price x Number of Subcribers -(Thousands)	Total Cost = Cost of License + Div. Sales, Gen, and Admin. Costs (Thousands)	Profit = TR-TC (Thousands)
$5.00	29.974	$134.88	$14.50	$149.87	$149.38	$0.49
$5.50	29.256	$131.65	$14.50	$160.91	$146.15	$14.76
$6.00	17.822	$80.20	$14.50	$106.93	$94.70	$12.23
$6.50	22.657	$101.96	$14.50	$147.27	$116.46	$30.81
$7.00	19.897	$89.54	$14.50	$139.28	$104.04	$35.24
$7.50	16.671	$75.02	$14.50	$125.03	$89.52	$35.51
$8.00	20.492	$92.21	$14.50	$163.93	$106.71	$57.22
$8.50	20.000	$90.00	$14.50	$170.00	$104.50	$65.50
$9.00	19.760	$88.92	$14.50	$177.84	$103.42	$74.42
$9.50	17.123	$77.05	$14.50	$162.67	$91.55	$71.11
$10.00	12.644	$56.90	$14.50	$126.44	$71.40	$55.04
$10.50	12.785	$57.53	$14.50	$134.24	$72.03	$62.21
$11.00	12.216	$54.97	$14.50	$134.38	$69.47	$64.91

We are told that the current product sells for $9.75 / month, that there are 15,059 subscribers and revenue is 146,823.

We are asked to estimate price sensitivity at the current price and determine how low product should be price along with the potential revenue using the DEMAND EQUATION which is Q = 39.057 – 2.461(Price) from the linear regression ran on our data.

Answer rating: 100% (QA)

Answer To get profit maximizing price lets calculate profit at each level Profit TR TC and TR Price ... View the full answer