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The elasticity of demand for a firm's product Is —4 and Its advertising elasticity of demand Is 0.32. a. Determine the firm’s optimal advertising-to-sales ratlo. Instructlons: Enter your response rounded to two decimal places. [o%]0 b. If the firm's revenues are $30,000, what Is Its profit-maximizing level of advertising? s [24%0] @ Explanation a. The optimal advertising to sales ratio Is given by AR =Eq a/(-Eq p) = 0.32/4 = 0.08. b. AR = Eg all-Eq p) — A/$30.000 = 0.32/4 — A =(0.08)($30.000) = $2.400.