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: splishy sp frizzles, 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 advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know 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 splishy splashies decreases by 20%, the quantity sold decreases by 22% and the quantity of cannies sold increases by 7%. Your job is to use the cross-price elasticity between splishy splash 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 splishy splashies and frizzles, and then bett splishy splashies and cannies. In the second column, determine if splishy splashies are a complement to or a substitute for each of the good Finally, complete the final column by indicating which good you should recommend marketing with splishy splashies. Relative to Splishy Splashies Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Splishy Splashies Frizzles Cannies
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: splishy sp frizzles, 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 advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know 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 splishy splashies decreases by 20%, the quantity sold decreases by 22% and the quantity of cannies sold increases by 7%. Your job is to use the cross-price elasticity between splishy splash 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 splishy splashies and frizzles, and then bett splishy splashies and cannies. In the second column, determine if splishy splashies are a complement to or a substitute for each of the good Finally, complete the final column by indicating which good you should recommend marketing with splishy splashies. Relative to Splishy Splashies Cross-Price Elasticity of Demand Complement or Substitute Recommend Marketing with Splishy Splashies Frizzles Cannies
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter15: Strategic Games
Section: Chapter Questions
Problem 5MC
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