The finance department predicts dropping the price

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Reference no: EM13696701

Suppose you have the following information.

Current product price equal $5.00

Current sales level equal 45,000 units

The advertising department expects the next $20,000 in ad spend should increase sales by 5,000 units to 50,000 while maintaining the current price of $5.00.

The finance department predicts dropping the price by $1.00 will increase sales by 15,000 to 60,000 units next year.

Which action should you take next year, increase advertising or drop price. Be sure to use economic theory we discuss in this class? (Show work please)

Reference no: EM13696701

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