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The Brewing Company sells ground organic coffee in one pound containers through several grocery chains in the United States. The marginal cost of production is constant at $4 per pound, and the advertising elasticity of demand is 0.2. The firm current spends $4 million per year on advertising and sells 4 million pounds of coffee per year.
(a) What is the firm's full marginal cost of advertising?
(b) Suppose the firm switches to a more effective advertising agency, and the advertising elasticity of demand increases to 0.3. What is the firm's new full marginal cost of advertising?
(c) Suppose the firm was maximizing profits from advertising before the change, and the marginal revenue from an additional dollar of advertising remains the same after the change. Is the firm maximizing the profits generated from the advertising expenditures after the change? If not, how can the firm adjust its advertising expenditures to maximize profits?
Construct a 2013 P&L for a company with the following data and calculate eps: (NOTE: eps is NIAT "available to common shareholders" divided by share quantity.
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The store is successful but sales are very slow growing at the moment. The family is looking to boost sales by developing a competitive edge for the future.
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The legal theory of strict product liability, which has not been without controversy. Some States do not recognize this theory. Consumer advocates would argue that strict product liability is necessary to protect the small consumer from big bu..
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