1. the forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales S Vary jointly with disposable personal income Y and the population between ages 15 and 40, Z, and inversely with the price of the snowmobiles P. based on past data, the best estimate of this relationship is S=k YZ/P. Where K has been estimated (with past data) to equal 100.
a. If y= $11,000, Z= $1200, and P=$20,000, what value would you predict for S?
b. What happens if P is reduced to $17,500?
c. How would you go about developing a value for k?
d. What are the potential eakness of this model?