Posted by mark on Monday, June 15, 2009 at 10:24am.
Assuming aztec will always spend $2million, no more no less, The PRICE elasticity of demand would be -1.
P*Q = 2million
Budweiser, Miller and Coors, who together produce 80% of all beer consumed in the US, each spend well over $500 million a year on television advertising campaigns, promoting their beer brands. Do you think these firms would welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $5 million yearly, and thereby allowed them all to reduce their costs dramatically without fear of losing ground to each other? Explain your answer
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