Suppose a firm has the following demand equation:
Q = 1,000 - 3,000P + 10A,
where Q = quantity demanded
P = product price (in dollars)
A = advertising expenditures (in dollars)
Assume for the questions below that P = $3 and A = $2,000
Suppose the firm dropped the price to $2.50. Would this be beneficial? Explain. Illustrate your answer with the use of a demand schedule.
Suppose the firm raised the price to $4.00 while increasing the advertising expenditures by $100. Would this be beneficial? Explain. Illustrate your answer with the demand schedule.© BrainMass Inc. brainmass.com October 9, 2019, 8:20 pm ad1c9bdddf
This solution discusses demand schedule, specifically in regards to determine how changes in price and expenditure would be beneficial or not to the company.