A system anticipates that spending $300,000 on an advertising campaign will incr

Question

A system anticipates that spending $300,000 on an advertising campaign will increase bed days by 650. The marketing department anticipates that each additional bed day will yield $2,100 in additional revenue and will increase costs by $1,700. The campaign

will reduce profits by $40,000.

b will increase profits by $40,000.

will increase profits by $90,000.

will increase profits by $210,000.

will reduce profits by $40,000.

b will increase profits by $40,000.

will increase profits by $90,000.

will increase profits by $210,000.

Explanation / Answer

Answer.) a. will reduce profits by $40,000.

profit = TR - TC = 650*2100 - [ 300000 + (650*1700)] = -$40,000

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