The wilson companys marketing manager has determined that, Ask an Expert

Economics

The wilson company's marketing manager has determined that the price of elasticity of demand for its product equals -2.2. According to studies she carried out, the relationship between the amount spent by the firm on advertising and its sales is as follows:

Advertising Expediture Sales

$100,000 1.0 mil

200.000 1.3 mil

300,000 1.5 mil

400,000 1.6 mil

If the wilson company spends $200,000 on advertising, what is the marginal revenue from an extra dollar of advertising?

Is $200,000 the optimal amount for the firm to spend on advertising?

If $200,000 is not the optimal amount, would you recommend that the firm spend more or less on advertising?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91678158

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