Question
The elasticity of demand for a firm's product is 2 and its advertising elasticity of demand is 0.3. a. Determine the firm's optimal advertising-to-sales ratio.
The elasticity of demand for a firm's product is 2 and its advertising elasticity of demand is 0.3.
a. Determine the firm's optimal advertising-to-sales ratio.
Instruction: Enter your response rounded to two decimal places.
b. If the firm's revenues are $50,000, what is its profit-maximizing level of advertising?
$
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Essentials of Econometrics
Authors: Damodar Gujarati, Dawn Porter
4th edition
73375845, 978-0071276078, 71276076, 978-0073375847
