Jordan Enterprises has estimated the contribution margin (P MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on market research and past experience, Jordan estimates the following relationship between the sales for Air Express and advertising/promotional outlays: ADVERTISING/PROMOTIONAL OUTLAYS ($) SALES REVENUE ($) 500,000 600,000 700,000 800,000 900,000 1,000,000 4,000,000 4,500,000 4,900,000 5,200,000 5,450,000 5,600,000 a. What is the marginal revenue from an additional dollar spent on advertising if the firm is currently spending $1,000,000 on advertising?b. What level of advertising would you recommend to Jordan’s management?

Jordan Enterprises has estimated the contribution margin (P MC)/P for its Air Express model of basketball shoes to be 40 percent. Based on market research and past experience, Jordan estimates the following relationship between the sales for Air Express and advertising/promotional outlays: ADVERTISING/PROMOTIONAL OUTLAYS ($) SALES REVENUE ($) 500,000 600,000 700,000 800,000 900,000 1,000,000 4,000,000 4,500,000 4,900,000 5,200,000 5,450,000 5,600,000 a. What is the marginal revenue from an additional dollar spent on advertising if the firm is currently spending $1,000,000 on advertising?b. What level of advertising would you recommend to Jordan’s management?

Contemporary Marketing

18th Edition

ISBN:9780357033777

Author:Louis E. Boone, David L. Kurtz

Publisher:Louis E. Boone, David L. Kurtz

Chapter14: Pricing Strategies

Section14.2: Forecasting Demand

Problem 1LO

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