You Own a Small Bookstore

question 21

Multiple Choice

You own a small bookstore. You have hired a marketing firm to calculate your own price elasticity of demand and your advertising elasticity of demand. The firm has provided you with the relevant numbers regardless of minor adjustments in price or advertising budget. Your own price elasticity of demand is around -1.7, and your advertising elasticity of demand is around 0.05. Interpret the advertising elasticity of demand.

• A)A one-percent increase in advertising expenditures will stimulate demand by about five-hundredths of one percent.
• B)A one-percent increase in advertising expenditures will stimulate demand by about five-tenths of one percent.
• C)A one-percent increase in advertising expenditures will stimulate demand by about five percent.
• D)A one-percent increase in advertising expenditures will stimulate demand by about one-fifth of one percent

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Definitions:

Dominance

The state or condition of having control or authority over others, often in a social or economic setting.

Job Analysis

The process of studying and collecting information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job.

Vertical Integration

A company's expansion by moving along its supply chain to control both production and distribution elements.

Leadership

The action of leading a group of people or an organization, or the ability to do this through vision, influence, and facilitating progress.