The Wilson Company’s marketing manager has determined that the price elasticity of demand for its pr
Question: 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 the Wilson Company spends $200,000 on advertising, what is the marginal revenue from an extra dollar of advertising?
b) Is $200,000 the optimal amount for the firm to spend on advertising? Explain why?
Price: $2.99
Solution: The answer consists of 1 page
Deliverables: Word Document
Deliverables: Word Document
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