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Description The Director of Marketing for Acme Inc. is planning his marketing budget for 2014. For a particular product, the Director of Marketing is
Description The Director of Marketing for Acme Inc. is planning his marketing budget for 2014. For a particular product, the Director of Marketing is planning to split his budget between advertising expenses and mail-in rebates. (A mail-in rebate means that, once a customer has bought the product, he mails the receipt to the company, and the company will send the customer a check for the amount of the rebate. We will assume that all customers who buy the product receive the rebate). The rebate can be offered in increments of 25 cents. Sales (units sold) are approximated by the following demand equation: (5000* (A^0.1)) + (10*(R^1.2)) i.e., (5000 times the Advertising Expenses raised to 0.1) plus (10 times the Rebate Per Unit raised to 1.2) where: A is the Advertising Expenses R is the rebate per unit Marketing expenditures are the sum of the advertising expenses and the total rebate costs. Total rebate costs are given by number of units sold times the rebate.
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