Question

The table shows the relationship for a hypothetical firm between its advertising expenditures and the quantity of its out-put that it expects it can sell at a fixed price of $5 per unit.
Advertising Quantity Sold at P = $5/IN Expenditures (millions) Million Units $1 8 $1.2 9 $1.4 9.4 $1.6 9.6 $1.8 9.7 a. In economic terms, why might the relationship between advertising and sales look the way it does?
b. Assume that the marginal costs of producing this product (not including the advertising costs) are a constant $4. How much advertising should this firm be doing? What economic principle are you using to make this decision?

Answer 1

You should start out with Google my business they will give you feedback and how many clicks you are receiving. That will give you a good idea on where you should put most of your advertising money in you also get a draft from Facebook business section showing you how many people click on your site how many people called you how many people look for directions you get a lot of information through these relatively inexpensive resources that you can use to help you with your decision on how much you should spend in advertising you will see what part of your advertising campaign generates the most interest age group you can define a certain age group to Target depending on what product you have Target the age group that is interested in your particular product you are advertising. for instance if it is a video game you may Target 15 years old to 25 years old then you are not wasting money advertising 2 people that you will never received any return on your advertising dollars.