You interview with an athletic footwear manufacturer that has annual advertising expenditures of $32 million and total sales rev

Question

3 years ago

13

You interview with an athletic footwear manufacturer that has annual advertising expenditures of $32 million and total sales rev

enue of $100 million, and the firm selects the profit maximizing level of advertising expenditures. If the advertising elasticity of demand is 0.4, then you know that "Rule of Thumb for Advertising" implies that the demand for the firm's products is

Business

1 answer:

son4ous [18] · Answer 1 · 2022-10-09T13:59:16+03:00

Answer:

elastic.

Explanation:

The advertising elasticity of demand measures how sensitive a market and sales are to marketing expenses. Advertising elasticity is calculated by dividing the change in quantity demanded by the percentage change in advertising expenses. Generally products with low advertising elasticity tend to have elastic demands.