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Advertisement elasticity of demand for good

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The price elasticity of good Y is -1.46. The advertisement elasticity of demand for good Y is 3.53. And these two elasticities are assumed to remain constant over the planned price and advertisiment changes. The Company producing good Y currently produces and sells 400 units per year. Forecast the demand for next year, if the Company is planning to increase price by 10 percent and advertisement expense by 6 percent. (Assume that the price and advertisement effects are independent and additive).

Reference no: EM131207297

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