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:

Intent Of The Parties

The actual and mutual intention of all parties involved in a contract or agreement, determined from their actions and words.

Certain Terms

Specific, clearly defined provisions within a contract or agreement that detail the expectations, duties, and rights of all parties involved.

Subject Matter

The topic or substance of a document, discussion, or work, especially referring to the content of a legal document or proceeding.

Special Price

A discounted pricing strategy applied to products or services for promotional purposes or to certain classes of customers.