The Most Useful Allocation Basis for the Departmental Costs of an Advertising

question 101

Multiple Choice

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:

• A) Floor space of each department.
• B) Relative number of items each department had on sale.
• C) Number of customers to enter each department.
• D) An equal amount of cost for each department.
• E) Proportion of sales of each department.

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Definitions:

Diminishing Marginal Utility

A principle stating that as a person consumes more units of a particular good or service, the satisfaction (utility) gained from consuming each additional unit decreases.

Income Effect

Variations in income for either a person or the economy as a whole, and how these variations influence the demand for specific goods or services.

Substitution Effect

A shift in consumer preferences resulting from alterations in the comparative costs of different products, causing buyers to switch from one product to another.

Demand Curves

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing to buy at that price.