Internet Advertising When OHaganBooks.com actually went ahead and increase...

Internet Advertising When OHaganBooks.com actually went ahead and increased Internet advertising from $5,000 per month to $6,000 per month (see Exercise 33) it was noticed that the number of new visits increased from an estimated 2,050 per day to 2,100 per day. Use this information to construct a linear model giving the average number v of new visits per day as a function of the monthly advertising expenditure c.

a. What is the model?

b. Based on the model, how many new visits per day could be anticipated if OHaganBooks.com budgets $7,000 per month for Internet advertising?

c. The goal is to eventually increase the number of new visits to 2,500 per day. Based on the model, how much should be spent on Internet advertising in order to accomplish this?

Reference:

Internet Advertising Several months ago. John O’Hagan investigated the effect on the popularity of OHaganBooks.com of placing banner ads at well-known Internet portals. The following model was obtained from available data:

new visits per day

where c is the monthly expenditure on banner ads.

a. John O’Hagan is considering increasing expenditure on banner ads from the current level of $5,000 to $6,000 per month. What will be the resulting effect on Web site popularity?

b. According to the model, would the Web site popularity continue to grow at the same rate if he continued to raise expenditure on advertising $1,000 each month? Explain.

c. Does this model give a reasonable prediction of traffic at expenditures larger than $8,500 per month? Why?