We are required to find the expected sales revenue of the month
The answers are given below
S = $9000
S = $18,600
A = $500
S = 15,012
Given:
S = 9000 + 12A
Where,
S = Monthly sales revenue
A = monthly advertising expenditure
a. If the firm does not spend on advertisement
S = 9000 + 12A
Where,
A = 0
S = 9000 + 12A
S = 9000 + 12(0)
S = $9000
b. If the firm spends $800 on advertising one month
S = 9000 + 12A
= 9000 + 12(800)
= 9000 + 9600
= 18,600
S = $18,600
c. S = 9000 + 12A
When
S = $15,000
15,000 = 9000 + 12A
15000 - 9000 = 12A
6000 = 12A
A = 6000/12
= 500
A = $500
d. If the firm increases monthly expenditure on advertising by $1
If A increases to $501
S = 9000 + 12A
= 9000 + 12(501)
= 9000 + 6,012
= 15,012
S increases to $15,012
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