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AED: Calculating the advertising elasticity of demand

The aim of this question is to calculate the advertising elasticity of demand.

What impact will an increase in the level of advertising have on the market demand curve? (select one answer)

(a) unmarked questionshift to the right
(b) unmarked questionshift to the left
(c) unmarked questionhave no impact

Given the following settings, what is the AED, and how would you interpret the value?; Try This

  • Original level of advertising = 100
  • Original quantity = 100
  • Final level of advertising = 140
  • Final quantity = 130
  • Original price = 20
  • Costs per unit = 7

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