Question
Groceries regularly send out coupons and spend on advertising to increase sales. The goal is to increase profits. Managers often conduct controlled experiments to identify
Groceries regularly send out coupons and spend on advertising to increase sales. The goal is to increase profits. Managers often conduct controlled experiments to identify the relationship between coupons, advertising, and sales. Based on such and experiment, one grocery store develops the following model for a product: Sales = 500-0.05price + 30coupon + 0.08advertising +0.25priceadvertising. In the model, price, coupons, and advertising are the determinants of sales. Coupon is a binary variable taking 1 when a coupon is used and 0 when no coupon is unused. Price and advertising are measured in dollar amount. Sales are measured in volume. At the no-sales strategy, at current price=$6.99, coupon=0 (no coupon used), and advertising=0, how much is the sales volume?
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