Question: A rm has estimated the following demand function for its product: 0 = 400 5 P + 5 i' + 10 A, where Q is


A rm has estimated the following demand function for its product: 0 = 400 5 P + 5 i' + 10 A, where Q is quantity demanded per month in thousands, P is product price. i is an index of consumer income. and A is advertising expenditures per month in thousands. Assume that P = $200. if: 100. and A = 20.) If the firm decides to raise the price by 2% in the coming year. accompanied by a 1% increase in advertising expenditures. Consumer income is expected to increase by 2% next year. How should the firm adjust the production {0}
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