Comparative Statics

Comparative Statics. Coupon Promotions, Inc., is a coupon book publisher with markets in several southwestern states. CPI coupon books are sold directly to the public, sold through religious and other charitable organizations, or given away as promotional items. Operating experience during the past year suggests the following demand function for its coupon books:

where Q is quantity, P is price ($), Pop is population, I is disposable income per capita ($), and A is advertising expenditures ($).
A. Determine the demand curve faced by CPI in a typical market where P = $5, Pop = 1,000,000 persons, I = $35,000 and A = $10,000. Show the demand curve with quantity expressed as a function of price, and price expressed as a function of quantity.
B. Calculate the quantity demanded at prices of $5, $2.50, and $0.
C. Calculate the prices necessary to sell 10,000, 25,000, and 50,000 units.

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