Chapter 8: Answers to Questions and Problems

A R = E Q,A -E Q,P ⇒0.075= E Q,A 4 ⇒ E Q,A = 0.075 4 =0.3 . Thus, Gillette’s advertising elasticity is 0.3.. Gillette’s demand is less responsive to advertising than its rivals; their higher advertising-to-sales ratio imply a greater advertising elasticity. ................
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