What is the optimal level of advertising

Reference no: EM13214173

Company Y is a monopoly industry. Its contribution margin is estimated at 20% (P-MC)/P = 0.2). From past experience, the owner has determined the following relationship exists between expenditures on advertising and total sales:

Advertising /sales Revenues

$0/$124,000

$5,000/$130,000

$6,000/$135,000

$7,000/$139,000

$8,000/$142,000

$9,000/$144,000

$10,000/$145,000

$11,000/$145,000

What is the optimal level of advertising?

Reference no: EM13214173

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