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Advertising is a multi-billion-dollar industry. Using concepts. which you have learned in this course. trace the reasons why you would consider advertising the goodsfservices that
Advertising is a multi-billion-dollar industry. Using concepts. which you have learned in this course. trace the reasons why you would consider advertising the goodsfservices that you sell. 1. What are the physical and economic characteristics of goodslser'vices sold which will benet from adverdsing? Why? Explain. 2. Let's assume that you are working as the Assistant Marketing Manager for Dr. Pepper company. Let's assume that each year the rm sell 6 million cans of Diet Dr. Pepper at a price of $0.50. The long-run average gross cost ofa serving is constant and is equal to $0.40 per can. 'r'our Manager calls you and assigns a project if it makes economic sense of running additional advertising during the World Series between the Houston Astros and the Philadelphia Phillies. You determine that running the SOesecond advertisement will raise the price consumers are willing to pay for the initial 6 million servings by $0.001l1/10 of a cent] per can. You also determine that the advertisement will allow you to sell 1 million more servings at a new price of $0.50 per sewing. The price of a 307second World Series commercial is $5 million. Should you buy the advertisement? Why or Why not? Please otfer a logical answer based on calculations and show all the work. 23. You determine that running the bO-second advertisement will raise the price consumers are willing to pay torthe initial 6 million servings by $00015 per serving. You also determine that the advertisement will allow you to sell 2 million more servings at a price of $0.5015 per serving. The price ofa oD-second World Series commercial is $10 million. Should you buy the advertisement? 4. Of these two opn'ons, which one will you recommend? Why or Why not in each case? Using economic analysis to explain your answers
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