Question

If the LRT agency were to buy a two-page ad in Paulding Community magazine for a builder that is planning on constructing a 500-home subdivision in the county, the ad would cost $5,000. How much money would the agency send the publication to pay for the ad?

Answer 1

The LRT agency will pay $5000

Step-by-step explanation:

The transaction here is the normal sell between agency and the publication so the agency will pay $5000 publication.

If the company had chosen commission basis the price to be paid could have been found by a linear equation for per unit commission basis.

So, here the $5000 is the cost of the two page advertisement which would be paid first by the agency then the agency can settle it’s charges with the construction company because LRT here is working as agency for construction company.

Answer 2

The agency would send $5000 to the publication because the cost of the ad is $5000. It only makes sense that the agency would pay the cost of the ad. That's how buying and selling anything works.