MANAGERIAL ECON.+BUS.STRATEGY (LOOSE)
MANAGERIAL ECON.+BUS.STRATEGY (LOOSE)
9th Edition
ISBN: 9781259896422
Author: Baye
Publisher: MCG
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Chapter 8, Problem 8CACQ

The elasticity of demand for a firm’s product is -2.5 and its advertising elasticity of demand is 0.2.

  1. Determine the firm’s optimal advertising-to-sales ratio.
  2. If the firm’s revenues are $40,000, what is its profit-maximizing level of advertising?

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Importance And Benefits Of Advertising; Author: Explified;https://www.youtube.com/watch?v=sUPdwHFO3Do;License: Standard Youtube License