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DedPeter [7]
3 years ago
10

You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products

: guppy gummies raskels, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of cannes sold increases by 5%. Your job is to use the cross-price elasticity between guppy gummies and the other goods to determine which goods your marketing firm should advertise together Complete the first column of the following table by computing the cross-price elasticity between guppy gummies and raskels, and then between guppy gummies and cannies. In the second column, determine if guppy gummies are a complement to or a substitute for each of the goods listed. Finally, complete the final column by indicating which good you should recommend marketing with guppy gummies. Relative to Guppy Gummies Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Guppy Gummies Raskels Cannies
Business
1 answer:
ZanzabumX [31]3 years ago
5 0

Answer:

See explanation below

Explanation:

Here, when the price of guppy gummies increases by 5%, the quantity of raskels sold decreases by 4% and the quantity of cannes sold increases by 5%.

i.e, % change in price of guppy grummies = 5%

% change in quantity of raskels = -4%

% change in quantity of cannes = 5%

i) Find the Cross price elasticity of demand between guppy grummies and raskels. Use the expression below.

% change in quantity demanded of raskels / % change in price of guppy gummies

= -4% / 5%

= -0.8

Substitute goods have a negative cross price elasticity of demand. Since, the cross price elasticity of demamd here is negative, the goods are substitute.

It is recommended not to advertise raskels with guppy grummies

ii) Find the Cross price elasticity of demand between guppy grummies and cannes. Use the expression below.

% change in quantity demanded of cannes / % change in price of guppy gummies

= 5% / 5%

= 1

Complement goods have a positive cross price elasticity of demand. Since, the cross price elasticity of demamd here is positive, the goods complement each other.

It is recommended to advertise cannes with guppy grummies.

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valentina_108 [34]

Explanation:

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Firstly, as the potential audience is students, it would be ideal to use an advertising communication channel such as social media, where there is a large presence of young people.

It is ideal that advertising involves elements of student culture to generate identification, desire and proximity to the potential audience, so a good choice would be to develop a campaign that involves the product with sports for example, the snack company could be more involved with the culture students, such as sponsoring a college football team and advertising their brand at games, or distributing free snacks at college events.

5 0
3 years ago
The ________ reflects the opportunity costs of spending funds now versus achieving a return through another investment, as well
algol [13]

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Explanation:

The discount rate relates to the interest rates on loans that the Federal Reserve Bank borrows from central banks and financial institutions through the commercial bank loan mechanism.

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5 0
3 years ago
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3 0
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Answer:

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Explanation:

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Total cost= fixed costs + unitary variable cost*number of units

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3 0
2 years ago
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Answer:

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7 0
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