Consider the following scenario and select the best answer: A company is trying to determine how to allocate its $145,000 advertising budget for a new product. The company is considering newspaper ads and television commercials as its primary means for advertising. The following table summarizes the costs of advertising in these different media and the number of new customers reached I increasing amounts of advertising. Media & No. of Ads No. of New Customers Cost per Ad Reached Newspaper: 1-10 900 $1,000 Newspaper: 11-20 700 $900 Newspaper: 21-30 400 $80 Television: 1-5 10,000 $12,000 Television: 6-10 7,500 $10,000 Television: 11-15 5,000 $8,000 For instance, each of the first 10 ads the company places in newspapers will cost $1,000 and is expected to reach 900 new customers. Each of the next 10 newspaper ads will cost $900 and is expected to reach 700 new customers. Note that the number of new customers reached increasing amounts of advertising decreases as the advertising saturates the market. Assume the company will purchase no more than 30 newspaper ads and no more than 15 television ads. What would the variable cells in this problem represent? O TV Ads O Newspaper Ads

Consider the following scenario and select the best answer: A company is trying to determine how to allocate its $145,000 advertising budget for a new product. The company is considering newspaper ads and television commercials as its primary means for advertising. The following table summarizes the costs of advertising in these different media and the number of new customers reached I increasing amounts of advertising. Media & No. of Ads No. of New Customers Cost per Ad Reached Newspaper: 1-10 900 $1,000 Newspaper: 11-20 700 $900 Newspaper: 21-30 400 $80 Television: 1-5 10,000 $12,000 Television: 6-10 7,500 $10,000 Television: 11-15 5,000 $8,000 For instance, each of the first 10 ads the company places in newspapers will cost $1,000 and is expected to reach 900 new customers. Each of the next 10 newspaper ads will cost $900 and is expected to reach 700 new customers. Note that the number of new customers reached increasing amounts of advertising decreases as the advertising saturates the market. Assume the company will purchase no more than 30 newspaper ads and no more than 15 television ads. What would the variable cells in this problem represent? O TV Ads O Newspaper Ads

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The role of brand names and advertising Which of the following statements about expenditures on advertising is true? When a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising. When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. Read the following example and determine whether it illustrates a common critique or defense of advertising. Raphael sees a commercial for a Brand X clothing company that depicts the wearers of the clothes out having a good time with friends. Although he doesn't particularly need new clothes, the commercial prompts him to buy a Brand X t-shirt. This illustrates a common of advertising.
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Del's and Rodney's are two plumbing services in a gentrifying area of South East London. Within the area they service, the two firms operate as a duopoly and together serve one hundred percent of the available local market. One of their key lines of business is visiting customer's homes to install a new shower rail. A student project has been investigating the local plumbing business and has estimated the following information for Del's and Rodney's: Total demand for new shower rails per week is given by P = 200 - 4Q Where Q is total market demand and can be divided between Del's (qd) and Rodney's (qr) such that Q = qd + qr Assuming that the marginal cost of serving an extra customer is £40 for each, and that marginal revenue for Del is given by MRd 2008qd - 4qr And marginal revenue for Rodney is given by MRr Then 2008qr - 4qd 8 CONTINUED
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5. If you can sell 10 computers for $1400 each or 11 computers for $1300 each, and the marginal cost is $1000, what should you do and what is the profit?
6. The role of brand names and advertising Which of the following statements about expenditures on advertising is true? O When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. O when a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. O If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising. Read the following example and determine whether it illustrates a common critique or defense of advertising. Yakov sees a commercial for a Brand X clothing company that depicts the wearers of the clothes out having a good time with friends. Although he doesn't particularly need new clothes, the commercial prompts him to buy a Brand X t-shirt. This illustrates a common ▼ of advertising.
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3.The role of brand names and advertising PLEASE HELP ME
1. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this game; and the 10,000 casual gamers who will pay up to $50 a year to play this game. If TopGames can NOT price discriminate, what is its profit-maximizing price? What is its profit? a. Price = $50; Profit = negative $100,000 b. Price = $50; Profit = $300,000 c. Price = $150; Profit = $100,000 d. Price = $150; Profit = $500,0002. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this…