Determining the firm level of advertising

Assignment Help Macroeconomics
Reference no: EM131284464

Last month, you assumed the position of manager for a large car dealership. The distinguishing feature of this dealership is its "no-hassle" pricing strategy; prices (usually well below sticker) are posted on the windows, and your sales staff has a reputation for not negotiating with customers. Last year, the company spent $2 million on advertisements to inform customers about its "no-hassle" policy and had revenues of $40 million. A recent study from an ad agency indicates that for each 3 percent increase a TV advertising expenditures, a car dealer can expect to sell 12 percent more cars, but that would take a 4 percent decrease in price to generate the same 12 percent increase in units sold. Assuming the information is correct, should you increase or decrease your firm's level of advertising? Explain. Show all calculations and provide the reasoning as clearly and concisely as possible.

Reference no: EM131284464

Questions Cloud

Write a fundraising letter to older alumni : Now rewrite the letter you wrote for Exercise 11. Adapt it for a new audience: people who graduated between 30 and 40 years ago. What will you change to persuade this cohort to donate to your school?
Explain what it means to be ethical as it relates : Explain what it means to be ethical as it relates to personal, academic, and professional growth.Provide at least one ethical dilemma you have encountered and describe how the issue was resolved.Describe how your general education courses have influe..
What competencies does the leader have that are strengths : What competencies does the leader have that are strengths? What competencies might be lacking or are weaknesses? Is the team marked by resonance (positive emotions) or dissonance (negative emotions)?
Evaluate negative online reviews : Find online reviews for a product you would like to buy. Which of the reviews infl uences you most? What about these reviews do you find persuasive? Discuss your analysis with a partner in class.
Determining the firm level of advertising : Assuming the information is correct, should you increase or decrease your firm's level of advertising? Explain. Show all calculations and provide the reasoning as clearly and concisely as possible.
Prepare a research paper on information literacy : Describe your experiences using resources, including concerns encountered when conducting academic research through the Ashford University Library. Areas of concern may include developing a research strategy, using the search function within a dat..
Explain how would you overcome the barriers to communication : How would you overcome the barriers to communication? Do you agree with the saying, "When in Rome, do as the Romans do" when it comes to doing business with another country?
Write a complaint letter to a business owner : Also find a way to encourage a response from the company. You may ask for reasonable compensation, if appropriate.
Assumption that sales managers view output : Suppose a CEO goal is to increase profitability and output from her company by bolstering its sales force and that it is known that profits as a function of output are P=40q-2q2 (in millions of US dollars) Graph the profit function. Compare and co..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd