(Answered) Gobi inc has sales of 40000000 the contribution margin is 0

Economics

Gobi Inc. has sales of $40,000,000. The contribution margin is $0% and the fixed costs are $3,000,000. The variable costs per unit is $12. The company is considering two different strategies for increasing their profits:

1. Spend $2,000,000 in advertising; the results is expected to increase the company's sales by 25%

2. Reduce the price by 20%; the price demand elasticity is -3.0

Which of the two strategies will generate the highest overall profits? Shall all calculations.

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9891769
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question my parking permit at the university gives me

Question: My parking permit at the university gives me rights to use a very convenient lot reserved exclusively for faculty. Even if I arrive at a peak hour like 10 a.m. I can almost surely find a space in it. Your stude ...

Question consumption in the us burst upward for a period of

Question: Consumption in the U.S. burst upward for a period of time immediately after the election of Bill Clinton to the Presidency, despite no major changes in disposable income. Explain what could have caused this eve ...

Question managing organizational change a multiple

Question: Managing Organizational Change: A Multiple Perspectives Approach 3nd edition By Ian Palmer and Richard Dunford and David Buchanan Lesson 1 Discussion This assignment will require you to research at least one of ...

Question what are the assumptions of the monopolistic

Question: What are the assumptions of the Monopolistic Competition Model? Even if there exist same number of consumers, same technology and cost curves and the same number of firms in the no-trade equilibrium both at HOM ...

Question beef and leather belts are complements in

Question: Beef and leather belts are complements in PRODUCTION (in other words, when the output of beef increases, the output of leather belts increases as well, and vice versa). Assume that the markets for beef and leat ...

Question with the innovation of hydraulic fracturing and

Question: With the innovation of hydraulic fracturing and horizontal drilling to extract natural gas from shale in the United States, U.S. gas production has increased and gas prices have decreased. With this new product ...

Question write a paper describing the benefits of setting

Question: Write a paper describing the benefits of setting up a pricing structure which includes price discrimination. Then select one product line and describes the benefits and costs of setting up a pricing structure w ...

In 2016 160000 electric vehicles were sold in the united

In 2016, 160,000 electric vehicles were sold in the United States. The instructions state to enter my response rounded to one decimal place. Part A. Supposing the average price of these cars was $40,000. Calculate price ...

Q 1 what is the difference between micro and macro

Q. 1. What is the difference between micro and macro economics? Give an example of a microeconomic phenomenon and an example of a macroeconomic one.

Question how is it possible to bear a cost without

Question: How is it possible to bear a cost without realizing it? What are some examples of policies that affect people in ways they may not even be aware of? The response must be typed, single spaced, must be in times n ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert