The table shows the relationship for a hypothetical firm between its advertising expenditures and the quantity of its out-put that it expects it can sell at a fixed price of $5 per unit.
advertising quantity sold at p = $5/in expenditures (millions) million units $1 8 $1.2 9 $1.4 9.4 $1.6 9.6 $1.8 9.7 a. in economic terms, why might the relationship between advertising and sales look the way it does?
b. assume that the marginal costs of producing this product (not including the advertising costs) are a constant $4. how much advertising should this firm be doing? what economic principle are you using to make this decision?

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Select the correct answer. ramon applied to the state university in the city where he lives, but he was denied admission. what should he do now? a.change his mind about graduating and drop out of high school so he can start working right away. b. decide not to go to college, because he didn’t have a backup plan. c.stay positive and write a mean letter to let the college know that they made a bad decision. d. learn from this opportunity, reevaluate his options, and apply to his second and third choices.

Why entrepreneurs start businesses. a) monopolistic competition b) perfect competition c) sole proprietorship d) profit motive