Elasticity of demand for its products

Assignment Help Business Economics

Reference no: EM138853

Q. The Wilson Company's marketing manager has determined that the price elasticity of demand for its products equals -2.2. according to studies she carried out, the relationship between the amount spent by the firm on advertising and its sales is as follows
Advertising Expenditures Sales
$100,000 $1.0 million
200,000 1.3 million
300,000 1.5 million
400,000 1.6 million

a. If the Wilson Company spends $200,000 on advertising, what is the marginal revenue from an extra dollar of advertising?

b. Is $200,000 the optimal amount for the firm to spend on advertising?

c. If $200,000 is not the optimal amount, would you recommend that the firm spends more or less on advertising?

Reference no: EM138853

Questions Cloud

Join a specialty group of physicians : Determine if you should go into your own solo private practice or to join a specialty group of physicians.

Constant debt equity ratio maintained : The expansion will cost $60 million and will be financed with $40 million in new debt initially with a constant debt equity ratio maintained thereafter.

Determine the forecast for each sku using method : Determine the forecast for each SKU using Method 1, 2 and 3. Then, assume the season is over, and your actual demand is given in the sheet "realized demand". Determine:

Marketing division sell its product. : What is the optimal transfer price for the basic plastic item . At what price should the marketing division sell its product.

Elasticity of demand for its products : The Wilson Company's marketing manager has determined that the price elasticity of demand for its products equals.

Equal wage rates in every market of labor : Suppose that all the necessary conditions exist for the realization of equal wage rates in every market of labor.

What is the thickness of electroplated gold : Two 53 {rm g} blocks are held 30 {rm cm} above a table. One of them is just touching a 50-long spring. The blocks are released at the same time. The block on the left hits the table at accurately the same instant as the block on the right first comes..

Demand for labour is elastic : if the demand for labor is elastic because the demand for labor will decrease more when you have elastic demand than if demand were inelastic.

If the boat proceeds at its maximum speed : A child in danger of drowning in a river is being carried downstream by a current that has a speed of 2.75 km/hr. The child is 0.560 km from shore and 0.750 km upstream of a boat landing when a rescue boat sets out. If the boat proceeds at its maximu..

User Account

All Pages