TBT bookstore is a monopoly seller of TBT branded T-shirts. Suppose the price elasticity of demand for its T-shirts is -1.6. Based on historical data, the manager of the store believes that a 15% percent increase in advertising will increase sales by 3% percent. TBT store is currently spending 10% of its sales on advertising.

a) Would you advice to the store to increase or decrease the advertising spending? What would be the optimal advertising-to-sales ratio in this situation?

b) What would the revised optimal advertising-to-sales ratio be if it turned out that price elasticity is lower, i.e., price elasticity of demand =-1.2

c) Explain intuitively why the change in the predicted sensitivity to price has led you to revise your recommendation regarding the level of advertising.

plz answer correct explain asap

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