QAW $=-150,0002400$ PAW $+1520$PGearS $+1200$ PPebble $1200$ PiPhone$6+44$ A

QAW is the quantity demanded of the Apple Watch per week, PAW is the price of the Apple Watch $($dollars per unit$).$ PGearS is the price of the Samsung Gear S watch $($dollars per unit$).$ PPebble is the price of the Pebble Steel $($dollars per unit$).$ PiPhone$6$ is the price of the mid$-$range iPhone $6$ smartphone $($dollars per unit$).$ A is the quarterly targeted advertising budget for the Apple Watch $($in thousands of dollars per quarter$).$

As the team prepared for launch, they contemplated a scenario with the following variable values: PAW $=$$$349,$ PGearS $=$$$380,$ PPebble $=$$$220,$ PiPhone$6=$$$299,$ A$=$$$15,500.$ Regression analysis results showed the coefficient of determination to be $0\mathrm{.}7581$ and the standard error of the estimate to be $30,000.$

According to an Apple Watch cost analysis by the Wall Street Journal of May $1,2015,$ variable hardware and manufacturing costs per unit were estimated at $$83\mathrm{.}70.$ Cost estimates did not include intellectual property, royalties and licensing fees, shipping, logistics$,$ and other channel costs. One analyst estimated these figures could amount to at least as much as the hardware costs. A reasonable variable cost estimate was $$178$ per unit. Using the estimated demand function and cost info, analyze this deicion to launch the apple product for $$349.$ Would you have argued for higher? Smartwatch Cost Structure