Pat Murphy is working on a special project for the marketing manager of the Television Land Company. The marketing manager asked Pat to determine the unit potential demand for color television sets in Indianapolis. All the data Pat was given is provided below. What is the correct unit potential demand that pat should have calculated? (Within errors of rounding) Given:
Per capital expenditures on TV sets per year = 180
Average price = $500
Population of Indianapolis = 1,000,000
Proportion spent on TV sets = .40
Proportion spent on black and white sets = .35
Proportion spent on color TV sets = .65
A) 504
B) 693
C) 936
D) 1287
E) It cannot be calculated from the information given.

Question

Quizplus · Accepted Answer

First, we need to calculate the total amount of money spent on TV sets per year in Indianapolis by multiplying per capita expenditures by the population and the proportion spent on TV sets:

180 x 1,000,000 x 0.40 = $72,000,000

Then, we need to calculate the amount of money spent on black and white sets and on color sets:

- Black and white sets: $72,000,000 x 0.35 = $25,200,000 
- Color sets: $72,000,000 x 0.65 = $46,800,000

Next, we need to calculate the unit potential demand for color sets by dividing the amount of money spent on color sets by the average price:

$46,800,000 ÷ $500 = 93,600

Therefore, the correct unit potential demand that Pat should have calculated is 936 (rounded).

Pat Murphy Is Working on a Special Project for the Marketing