Problem
Suppose your company produces athletic footwear. Marketing studies indicate that your own price elasticity of demand is 3 and that your advertising elasticity of demand is 0.5. You may assume these elasticities to be approximately constant over a wide range of prices and advertising expenses.
a) By how much should the company mark up price over marginal cost for its footwear
b) What should the company's advertising-to-sales ratio be?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.