The Advertising Manager for Roadside Restaurants, Inc

question 46

Multiple Choice

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows:
If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits") under certainty?

• A) $3.40
• B) $4.60
• C) $8.00
• D) $9.00
• E) $10.00

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Definitions:

Long-run Equilibrium

A state in which all factors of production are optimally allocated in the long term, resulting in the efficient operation of markets with no tendencies for change under constant conditions.

Average Total Cost

Average Total Cost is the total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs in the calculation.

Economic Profits

The financial gains that exceed the opportunity costs of a business's resources, considering both explicit and implicit costs.

Perfectly Competitive

A market structure characterized by a complete absence of rivalry among firms, where all firms sell identical products and no single firm can influence the market price.