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Scenario 16-7 Consider the Problem Facing Two Firms, YumYum and Bertollini, in Bertollini

question 238

Multiple Choice

Scenario 16-7
Consider the problem facing two firms, YumYum and Bertollini, in the frozen food market. Each firm has just come up with an idea for a new "frozen meal for two" which it would sell for $9. Assume that the marginal cost for each new product is a constant $2, and the only fixed cost is for advertising. Each company knows that if it spends $12 million on advertising it will get 1.5 million consumers to try its new product. YumYum has done market research which suggests that its product does not have any "staying" power in the market. Even though it could get 1.5 million consumers to buy the product once, it is unlikely that they will continue to buy the product in the future. Bertollini's market research suggests that its product is very good, and consumers who try the product will continue to be consumers over the ensuing year. On the basis of its market research, Bertollini estimates that its initial 1.5 million customers will buy one unit of the product each month in the coming year, for a total of 18 million units.
-Refer to Scenario 16-7. If Bertollini decides to advertise its product it can expect to

Definitions:

White Matter

The part of the brain and spinal cord composed of myelinated nerve fibers that facilitates communication between different brain regions and between the brain and spinal cord.

CNS

The central nervous system, comprising the brain and spinal cord, which coordinates and controls most bodily functions.

Myelinated Axons

Axons that are coated with myelin, a fatty substance that speeds up the transmission of nerve impulses, enhancing the efficiency of the nervous system.

Action Potentials

Electrical impulses that are the means by which information is transmitted along neurons and muscle cells.