Answer to Question #40075 in Macroeconomics for Arash
Where PX, PY, and PZ represent the prices of goods X, Y, and Z;
I measures income per capita; and A is advertising. Currently:
PX =2.00,PY =2.50,PZ =1.00,I=4,andA=3.05.
Calculate the advertising elasticity of demand for X. Interpret your answer.
What kind of change in the price of X would you recommend if the firm is interested in maximizing revenue?
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