Effects of advertising on market equilibrium

Reference no: EM1367249

Joy's frozen yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of joy's various outlets, it was found that the demand curve follows this pattern. Q=200-300P+120 I +65T-250Ac+400 Aj

Q= number of cups served

I= per capita income

T= average outdoor temperature

Ac= competition's monthly advertising expenditure

Aj=joy's own monthly advertising expenditures

P=1.50, I=10, T=60, Ac=15, Aj=10

a) Estimate the number of cups served per week and determine outlet demand curve

b) What would be the effect of a $5000 increase in the competitors' advertisement expenditure and outlet demand curve

c) What would joy's advertising expenditure have to be to counteract this effect?

Reference no: EM1367249

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