Individual Lab 8
Instructions
- Build the model for profit model for gaming mouse in R.
- Answer questions 1-16 to the Rmd model.
Model
A manufacturer of wireless gaming mouse is preparing to set the price on a new model. Demand (D) is thought to depend on the price (P) and is represented by the model:
D = 2500 – 3P
The accounting department estimates that the total costs (C) can be represented by
C = 6000 + 4D
Develop a model for the total profits (Revenues minus Costs) and represent it on an Excel spreadsheet. Consider demands as units sold. Create columns for price, demand, revenue, costs, and profits. Use a table and a graph with $ on the y-axis and Demand on the x-axis to find the price at which profit is maximized.
Questions to Answer
- When the price for the gaming mouse is set to $100, what is the corresponding prediction for demand?
- When the price for the gaming mouse is set to $100, what is the corresponding projected revenue?
- When the price for the gaming mouse is set to $100, what are the corresponding costs?
- When the price for the gaming mouse is set to $100, what are the corresponding projected profits?
- Build a column in Excel for Price and consider price in $10 increments from $50 to $600. (This means your column should have $50, $60, $70, $80, etc. all the way to $600.) At what price for the gaming mouse is projected demand minimized?
- At what price for the gaming mouse is projected demand maximized?
- At what price for the gaming mouse is projected profit maximized?
- At what price for the gaming mouse is projected revenue maximized?
- True/False: Costs are projected to increase as the price for gaming mouse goes up.
- True/False: The lower the price for the gaming mouse, the higher the projected demands.
Additional Questions to Include in Rmd file
- Graph Profits on your chart; include the series using a line or scatterplot.
- Graph Revenues on your chart; include the series using a line or scatterplot. 13. Graph Costs on your chart; include the series using a line or scatterplot.
- Include an x-axis label on your chart.
- Include a y-axis label on your chart.
- Include a title on your chart.