Reference no: EM132986714
If: QDRQPPRPPRM = 350 - 5P + 5M + 3P + 2Adv. Where is the quantity demanded (in thousands of boxes) per year, is price per box, is the price of a rival product, and M is yearly consumers' average income. At present, = $20, = $10, Adv = $15, and = $20
Question a. Calculate the price elasticity of demand for the company's product? What kind of information do you infer from it. If the company decides to increase sales of its product by 10% through a price-change, what should they do to price -
Question b. Is the company maximizing its sales revenue by charging $10? If not, what price should it charge to maximize its revenue?
Question c. What is the income elasticity of demand of the product?
Question d. What is the advertising elasticity of demand? If the corporation wants to increase its sales by 5% by adjusting its ad expenditures to affect the increase, what should it do? Increase or decrease its ad expenditures?
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