What is optimal amount for the firm to spend on advertising

Assignment Help Econometrics
Reference no: EM13242629

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

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

Reference no: EM13242629

Questions Cloud

Explain what volume diluted solution contains : To what volume should you dilute 150 mL of an 8.00 M CuCl_2 solution so that 55.0 mL of the diluted solution contains 5.9 g CuCl_2?
What is history and is history a form of memory : What is history? Is history a form of memory? How do we study history? Who studies history?
State hydrochloric acid reacts with sodium carbonate : Hydrochloric acid (HCl) reacts with sodium carbonate (Na2CO3), forming sodium chloride (NaCl), water (H2O), and carbon dioxide (CO2). This equation is balanced as written
Sales is expected to be carried out without any expansion : Determine Upton's projected external capital requirement if the increase in sales is expected to be carried out without any expansion of fixed assets.
What is optimal amount for the firm to spend on advertising : The Wilson Company's marketing manager has determined that the price elasticity of demand for its product equals -2.2. According to studies he carried out, the relationship between the amount spent by the firm on advertisin
What angle does the protons velocity make with b : A proton with v = 322 m/s is moving through a region in which the magnetic field is B = 2.2 T, what angle does the protons velocity make with B
Calculate the exact integration result using matlab : Calculate the exact integration result using Matlab symbolic tools and calculate the errors in calculating work done
Between 1935 and 1943-the workers progress administration : Which of the following states was most affected by population migrations during World War II? Between 1935 and 1943, the Workers Progress Administration. The 1973 Paris Peace Accords led to the
A fund manager at a brokerage firm : You have just taken over as a fund manager at a brokerage firm.

Reviews

Write a Review

Econometrics Questions & Answers

  Do given percentage change in full cost of illegal download

Since September the RIAA has filed hundreds of lawsuits against music pirates, claiming "egregious" copyright infringement and seeking up to $150,000 per violation. Many defendants have settled out of court for up to $10,000.

  How nebraska can end up with bushels of wheat and corn

For Nebraska the opportunity cost of producing 1 bushel of corn is 3 bushels of wheat. At present, Iowa produces 20 million bushels of wheat and 120 million bushels of corn, while Nebraska produces 20 million bushels of corn and 120 million bushel..

  Why a snow removal company is planning to diversify

A small business owner who owns/operates a snow removal company is planning to diversify and begin installing in-ground swimming pools to enhance his income for the next two years. He forecasts that he and his employees will be able to install16 i..

  How to verify all of the prices and quantities

questions are even asking. Would you be able to explain what they are asking as well as provide me with a solution I'm more interested in LEARNING this than just getting the answer, so I really need help with the explanation of how you come up wit..

  What is the equivalent equal annual cost of the fuel

Gasoline costs $0.95 per liter and will increase at 6% per year. At a fuel economy of 9km/liter, what is the present worth cost of fuel for five years of driving 30,000km per year? Use 6.2% interest. What is the equivalent equal annual cost of the..

  Discuss the impact of changes in the size of the age group

Discuss the impact of changes in the size of the 18-24 age group on marketing strategy planning in the United States. What are some specific marketing strategies that result from this change

  What term do economists use to describe second outcome

If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation What term do economists use to describe this..

  Calculate expected return from each technique for the farmer

Suppose a farmer has some money of his own to invest in a better way to cultivate his land. Cultivation can be done using two techniques, both of which require an initial start-up capital of $200. The first technique is risk free and generates a..

  What would be the point elasticity of demand at the price

Suppose you own a movie theater and most of your costs (the band, security, the land rental, etc.) are independent of how many people show up. What is likely to be the point elasticity of demand at the price you decide to charge

  What would be the equivalent value of expenditure today

The U.S. Border Patrol is considering the purchase of a new helicopter for aerial surveillance of the New Mexico-Texas border with Mexico. A similar helicopter was purchased 4 years ago at a cost of $140,000.

  How big would the firms profit or loss be

Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $3 per bag no matter how many bags are produced.

  What is the mc of increasing production from 0 to 1

For ATC and AVC, plot the points on the integer: for example, the ATC of producing one tablecloth is 80, so you should start your ATC curve by placing a green triangle at the point (1, 80). For MC, plot the points between integers.

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