Counteract the drop in income


A travel company has hired a management consulting company to analyze demand in 26 regional markets for one of its major products: a guided tour to a particular country. The equation for the quantity demanded is Q = 1500 - 4p + 5A + 10I + 3Px Where Q = amount of the product demanded P = Price of the product in dollars A = advertising expenditure in dollars I = Income in dollars Px = price of other travel products that are provided by a competing travel company. a. Determine the demand curve for this product using the following data. P = $400, A = $20,000, I = $15,000, Px = $500 b. Suppose people's income drops to $10,000. How much would this firm have to increase its advertising in order to counteract the drop in income?

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Accounting Basics: Counteract the drop in income
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