Question: Suppose fast-food industry demand function is approximated as Q = Px -8.8 Py 1.85 A 1.3 M 1.5 , where Q is the fast-food quantity

  1. Suppose fast-food industry demand function is approximated as Q = Px-8.8Py1.85A1.3M1.5, where Q is the fast-food quantity demanded, Px is the unit price of fast-food, Py is the unit price of dine-in restaurant food, A is fast-food advertisement cost, and M is fast-food consumers' average income. Also, last year, thefirm spent $2.85 million on advertising (TV, newspapers, etc.) and thetotal sales were $18.75 million. Should theadvertising expenditures maintain, increase, or decrease? Show the steps and calculations to justify theposition. Explain.

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