Find the advertising elasticity of demand

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A relatively small law firm in Birmingham had averaged revenues of $75,000 per month and had spent $2,000 per month on television advertising. For 3 months, the firm conducted an experiment by spending $5,000 per month to determine if the increased promotion would lead to higher revenues that could justify that even of ongoing promotional effort. Monthly sales revenues rose to $85,000. The lawyers and marketing consultant consider that no other factor caused any increase in revenue.

Assume that the advertising elasticity of demand is constant and find the advertising elasticity of demand (AED) for this firm at this time.

Reference no: EM132246462

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