Business Analytics (2nd Edition)
Business Analytics (2nd Edition)
2nd Edition
ISBN: 9780321997821
Author: James R. Evans
Publisher: PEARSON
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Chapter 1, Problem 13PE

Total marketing effort is a term used to describe the critical decision factors that affect demand: price, advertising, distribution, and product quality. Let the variable x represent total marketing effort. A typical model that is used to predict demand as a function of total marketing effort is D = a x b Suppose that a is a positive number. Different model forms result from varying the constant b. Sketch the graphs of this model for b = 0 , b = 1 , 0 < b < 1 , b < 0 , and  b > 1. What does each model tell you about the relationship between demand and marketing effort? What assumptions are implied? Are they reasonable? Are they reasonable? How would you go about selecting the appropriate model?

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