A Local Fast Food Restaurant Uses Inserts to Advertise Their

question 39

Multiple Choice

A local fast food restaurant uses inserts to advertise their upcoming offers to students. The inserts are used in a student newspaper and in the area code where students live on-campus. Why would the restaurant choose NOT to include inserts in those papers where students reside with their parents off-campus?

• A)because the expected growth rate of on-campus students is much higher
• B)because the likelihood of student's parents purchasing fast food is low
• C)because the size of the market off-campus is much smaller
• D)because of the cost of reaching the off-campus segment

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Definitions:

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Profit-maximizing Firm

A business organization that focuses on making the highest possible profit by adjusting its production and pricing strategies.

Marginal Cost

The rise in overall expenses associated with the creation of an extra unit of a good or service.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, representing excess returns over the firm's opportunity costs.