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25 February, 13:51

You are the manager of a popular hat company. You know that the advertising elasticity of demand for your product is 0.25. How much will you have to increase advertising in order to increase demand by 5 percent?

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  1. 25 February, 14:49
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    20%

    Explanation:

    if the advertising elasticity = 0.25 and you want to increase the quantity demanded by 5%, you will need to increase advertisement by = 5 / 0.25 = 20%

    The advertising elasticity measures how much does a change in advertising changes the quantity demanded of a product or service.
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