Currently evaluating new advertising campaign

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Reference no: EM131371358

You are currently evaluating a new advertising campaign. You conducted the following lab experiment:

Subjects were randomly assigned to either watching the old ad or the new ad. They were then asked how much they were willing to pay for the product. It turns out that people are willing to pay on average $4 more when shown the new ad.

Your best estimate of the old monthly demand function is:

D(p) = 4000-10*price

Your marginal cost is $180, your monthly fixed costs of production are $14000, and your current advertising campaign costs an additional $1500/month.

Up to how much should you be willing to pay per month for this new advertising campaign?

Reference no: EM131371358

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