Katch You (KY) has developed a new digital camera with an automatically triggered flash. This product was introduced last year and a follow-up survey has just been completed,
giving rise to the following regression equation:
Qx = - 120.1366 - 83.78Px + 0.09Y – 25.45Pc + 81.39Ps +0.1824Ax
Where Qx is the quantity demanded; Px is the price per unit in dollars, Y is the income per
capita, Pc is the price per unit for the camera's case and Ps is the price per unit (average) of
other cameras; Ax is the advertising budget per month.
The cost of production for each camera is $650.28 and the current price is $1,101.99. The
current values for the other variables are, Y = $800,000, Pe = $99.99, Ps = $899.99 and Ax
= $45,000
a) Determine if the markets are related
5marks
b) What is the revenue implication if there is an economic boom?
5 marks