Question
A Laptop company wants to spend money on an advertising campaign. Using their market analysis data their current demand and supply for their product is
A Laptop company wants to spend money on an advertising campaign. Using their market analysis data their current demand and supply for their product is given as QD1 = 2500 - 3P and QS1 = 5P - 1500. They intend of spend 100,000.00 on the advertising campaign, this would be considered as a lump sum payment and not anticipated to affect the supply function. After the advertising campaign the new demand function is anticipated to be QD2 = 3400 - 2P. You are asked to analyse this planned spending on the advertising campaign. Calculate the equilibrium price and quantity for the product before the advertising campaign Calculate the equilibrium price and quantity for the produce after the advertising campaign Given the change in total revenue before and after the advertising campaign, do you believe that the spending on the advertising campaign was worth it? (Remember that Total Revenue = Price x Quantity)
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