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Compute the quantity sold and elasticity at a price

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Reference no: EM132445109

Robinson plastics makes clear plastic products. They invented a new cup to crush medication. A survey of local drug manufacturers and retailers suggests that market demand for the next year will be: Q=2,000,000-100,000P+5A where Q=unit sales, P=price in dollars, and A=advertising expense. They are considering a price of one or two dollars and an advertising budget of $10,000. Production cost=$.75 per unit

A. Compute the quantity sold and elasticity at a price of both $1 and $2 with the given advertising budget.

B. What is the advertising elasticity at $2? Given an interpretation of the advertising coefficient.

Reference no: EM132445109

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