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Suppose that you are currently selling a branded food product, which has a demand elasticity of -4. Assume the unit (marginal) cost is $3. Also
Suppose that you are currently selling a branded food product, which has a demand elasticity of -4. Assume the unit (marginal) cost is $3. Also assume that you sell 1000 units a day at the profit maximizing price. Also assume that you are a monopolistic competitor operating in the short-run. Suppose that you launch an advertising campaign that ultimately doesn't impact your sales, but does drop elasticity to -1.80. How much would your short run profit change (do not include the cost of advertising)? (Note: calculate the initial profit and the post-advertising profit and take the difference)
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