Problem
An analyst for Home Depot estimates the demand for lumber from Home Depot to be
ln(QL) = 3.6 â€" 3.2 ln(PL) + 3.8 ln(PW) + 2.3 ln(A)
where QL is the linear feet demanded for lumber from Home Depot, PL is the price per linear foot of lumber from Home Depot, PW is the price per linear foot of lumber from Lowes, and A is the dollars spent advertising Home Depot. Last year, Home Depot sold 10 million linear feet of lumber and spent $2 million on advertising on national T.V. Its plant lease is $4 million, and that includes utilities. Capital depreciated from age, at a cost of $5 million. Payments to employees (all on salary) cost $1.75 million. Finally, through its Williams Brothers Lumber Co. subsidiary, Home Depot planted replacement trees, hired lumberjacks, and milled trees into 10 million linear feet of lumber at a combined cost of $5 million. All inputs were purchased in competitive input markets. What price should Home Depot charge per linear foot of lumber?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.