Suppose You Own a Business and Your Own Price Elasticity

question 1

Multiple Choice

Suppose you own a business and your own price elasticity is -2. In addition, suppose your advertising elasticity of demand is 0.50. If your marginal cost per unit is $4, what is your optimal advertising-to-sales ratio?

• A)0.25
• B)0.375
• C)0.625
• D)1.25

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Definitions:

Hypertension Prevention

Strategies and lifestyle adjustments aimed at reducing the risk of developing high blood pressure.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, commonly measured to assess heart health.

Hypoxia

A medical condition in which the body or a region of the body is deprived of adequate oxygen supply at the tissue level, which can lead to various symptoms and health issues.

Cyanosis

A bluish discoloration of the skin and mucous membranes due to insufficient oxygen in the blood.