SCENARIO #3: DECREASED PRICES The following planning assumptions should be used in your NEW PRICES SCENARIO. Scenario Background: Go back to your original budget in Scenario #1. HB believes its products are relatively price elastic; as such, they believe that decreases in prices will increase volumes and should lead to higher revenues and higher profits. To ensure success, they have also decided to advertise on the radio. Rework Scenario #1 with these changes; revised information follows below. Then, state definitively your recommendation as it relates to this new scenario. Should the company lower its prices and advertise? Revised Product Listing/Sales Forecast Assumptions Product Selling Price Volumes Year 2 Q1 Year 2 Year 2 Q2 Q3 Year 2 Year 3 Q4 Q1 1 oz Sage $2.65 1,100 1,700 1,450 945 572 3 oz Clover $7.20 7,655 10,400 7,754 7,008 5,345 Advertising Assumptions The company expects to incur the following advertising expenses in Year 2: Quarter 1 - $3,000 Quarter 2 - $5,000 Quarter 3 - $3,000 Quarter 4 - $3,000 All advertising expenses are paid as incurred