Exhibit 7.1 The Following Questions Are Based on the Problem Below

question 7

Multiple Choice

Exhibit 7.1
The following questions are based on the problem below.
A company wants to advertise on TV and radio. The company wants to produce about 6 TV ads and 12 radio ads. Each TV ad costs $20,000 and is viewed by 10 million people. Radio ads cost $10,000 and are heard by 7 million people. The company wants to reach about 140 million people, and spend about $200,000 for all the ads. The problem has been set up in the following Excel spreadsheet.
-Refer to Exhibit 7.1. What formula goes in cell D6?

• A) =SUMPRODUCT(B2:B3,B6:B7)
• B) =B2*C2+B6*C6
• C) =SUMPRODUCT(B2:C2,B10:C10)
• D) =SUMPRODUCT(B2:C2,B6:C6)

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Definitions:

Price

The financial sum necessary for acquiring a good or service.

Willingness to Pay

The utmost expenditure an individual is comfortable making on a good or service, demonstrating the value they attribute to it.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating economic welfare.

Market Price

The present cost at which a good or service can be purchased or sold within a competitive market.