A catalog retailer is preparing to release a new catalog. They initially tested the response to the catalog in a subset of their customers. In the initial test, they reached out to 25,000 customers and sent them a copy of the catalog, which costs $0.75. 2,150 customers made a purchase, spending an average of $55. The retailer's margin is 60% (i.e., variable costs of goods sold are 40%). a. What was the gross profit in dollars of this test mailing? b. What was the gross profit as a percent of gross sales? c. What was the return on marketing expenditures (gross profit as a function of marketing costs)? d. What was the breakeven for this campaign? The marketer now engages in RFM analysis. They identify that RFM cell 452 had a response rate of 3.80%. What is the breakeven index for that group? e.

A catalog retailer is preparing to release a new catalog. They initially tested the response to the catalog in a subset of their customers. In the initial test, they reached out to 25,000 customers and sent them a copy of the catalog, which costs $0.75. 2,150 customers made a purchase, spending an average of $55. The retailer's margin is 60% (i.e., variable costs of goods sold are 40%). a. What was the gross profit in dollars of this test mailing? b. What was the gross profit as a percent of gross sales? c. What was the return on marketing expenditures (gross profit as a function of marketing costs)? d. What was the breakeven for this campaign? The marketer now engages in RFM analysis. They identify that RFM cell 452 had a response rate of 3.80%. What is the breakeven index for that group? e.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The city council is to decide on a proposal to raise property taxes. Suppose Ms. Tuttle is the chair and the council’s other two members are Mr. Jones and Mrs. Doubtfire. The voting procedure works as follows: Excluding the chair, Mr. Jones and Mrs. Doubtfire simultaneously write down their votes on slips of paper. Each writes either for or against the tax increase. The secretary of the city council then opens the slips of paper and announces the vote tally. If the secretary reports that both slips say for, then the tax increase is implemented and the game is over. If both vote against, then the tax increase is not implemented and, again, the game is over. However, if it is reported that the vote is one for and one against, then Ms. Tuttle has to vote. If she votes for, then the tax increase is implemented, and if she votes against, then it is not. In both cases, the game is then over. As to payoffs, if the tax increase is implemented, then Mrs. Doubtfire and Mr. Jones each receive a…
A computer reseller needs to decide how many laptops to order next month. The lowest end laptop costs $220 and the retailer can sell these for $300. However, the laptop manufacturer already announced that they are coming out with a new model in a couple of months. Any laptops that will not be sold by the end of next month will have to be heavily discounted at half-price. The reseller also needs to consider that every time he fails to fulfill a laptop order, he stands to lose $25 for every unit. Based on the past months’ sales, the reseller estimates the demand probabilities for sales (S) as follows: P(0 units) = 0.3; P(1 units) = 0.4; P(2 units) = 0.2; P(3 units) =0.1. The reseller thinks it’s a good idea to conduct a survey on whether or not his customers are going to buy laptops and how many. The survey results will either be Yes (Y), No (N) or Don’t Know (DK). The probability estimates of the results based on the demand for number of units are: P(Y|S = 0 units) = 0.1 P(Y|S = 1…
No written by hand solution
P = c + 1/(nxb). When the number of firms (n) in an industry is more thena. each firm's price level falls due to increased competitionb. the average cost of each firm rises because it produces lessc. each firm's price level rises as competition fallsd. the average cost of each firm falls as it produces more
M3
In the late 1990s, car leasing was very popular In the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the car. If the customer decided to keep the car, the customer would pay a price to the manufacturer, the "residual value," computed as 60% Df the new car price. The manufacturer would then sell the retumed cars at auction. In 1999, manufacturers lost an average of $480 on each returned car (the auction price was, on average, $480 less than the residual value). Suppose two customers have leased cars from a manufacturer. Their lease agreements are up, and they are considering whether keep (and purchase at 60% of the new car price) their cars or return thelr cars. Two years ago, Becky leased a car valued new at $18,500. If she returns the car, the manufacturer could likely get $12,950 at auction for the car. Eleen also leased a car, valued new at $19,000, two years ago. If she returns the car, the…
Four companies (Firm 1, 2, 3 and 4) are producing a product for the market. Each company will decide the number of products produced. You are given that • . Each firm can choose its qi. Given the quantites produced by four companies (denoted by 91, 92, 93, 94 respectively), the market price of the product is P = 400 - 91-92-93 - 94. Cost of producing one product is 20 (*Note: So the total cost for producing qi units of product is 20qi. Firm 1 and Firm 2 will first decide the quantities produced simultaneously at the beginning. After knowing 91 and 92, Firm 3 and Firm 4 will decide the quantities produced simultaneously. (a) State the strategic profiles of each firm. (b) Find all possible subgame perfect equilibrium for this games. Provide full justification to your answer.
which is the nash equilibrium? small pig does press large pig does press (20, 130), small pig doesn't press large pig does press (140, 10), small pig does press large pig doesn't press (-5, 150), small pig does not press large pig doesn't press (0,0).
Reactors `R’ Us operates a nuclear power plant in Potsdam.In the event of reactor failure, there would be major damages to the North Country. The company can reduce the probability of failure through proper maintenance of the facility. The marginal cost of maintenance is increasing in the amount of maintenance done (and thus decreasing in the probability of an accident). We can write this marginal cost curve as MAC=2-10p (where 0<p<1, and represents the probability of a failure over a 50 year period). The marginal expected damages are an increasing function of the probability of an accident so that MD=2.2+10p. Provide a graph or graphs to illustrate your analysis/answers to the following questions. A. What is the efficient probability of reactor failure? B. If “Reactors ‘R’ Us” thinks that, in the event of reactor failure, they will NOT be found liable for damages, what probability of failure will they choose? C. If “Reactors ‘R’ Us” thinks that, in the…
Channels 7 and 10 are the only television networks. They want to capture as much of the market as possible because it helps them earn more advertising revenue. Each channel can choose to show a cooking or a reality show on Sunday night. If they both airing cooking shows or both airing reality shows, Channel 10 gets 60% of the market. If Channel 10 is showing a cooking show and Channel 7 is showing a reality show, Channel 10 gets 70% of the market. If Channel 10 is showing a reality show and Channel 7 is showing a cooking show, Channel 7 gets 45% of the market. In a sequential game, Channel 7 moves first. What is true? Group of answer choices Channel 7 will choose reality. Channel 7 has a second mover advantage. Channel 10 will choose cooking. Channel 10 will choose reality. Channel 7 will choose cooking.
The small family company that you manage has invested $35,000 in developing a new product, but the development is not quite finished. At a recent meeting, your family company management team predicts that the introduction of competing products has reduced the expected sales of your new product to $30,000. If your company receives zero profit for an unfinished product, and if it would cost $10,000 to finish development and make the product, you go ahead and do so. The most your family company should spend to complete development is O should; $30,000 O should; $20,000 O should; $10,000 O should not; $0
A class uses weighted averages to calculate your course grade. Homework, quizzes, and discussions are each worth 14% of your grade. A final exam is worth 40% and participation is worth 18%. A student has a score of 95 on homework, 89 on quizzes, 92 on discussions, 97 on participation, and earns 82 on their final exam. What is the weighted average of their course grade? Enter your answer as 1 decimal place.