PRODUCT DIFFERENTIATION 3. ADVERTISING INTENSITY A one percent increase in prices is associated with a ten percent reduction in the traded units in industry 1. Meanwhile, a one percent increase in prices is associated with a - per- cent reduction in units traded in industry 2. However, it is well known that advertising expenditures have an equally large effect on sales in both industries. With this informa- tion, what would you expect for advertising intensity? Would you expect it to be roughly the same for both industries, higher in industry 1 than industry 2, or higher in industry 2 than industry 1? Justify you answer. 2