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    Price and Output Determination

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    Why is advertising prevalent in many oligopolies, especially when industry demand is inelastic? Illustrate your answer by assuming that with advertising, a firm's demand curve has price elasticity of -1.5 and without advertising, it is -2. If MC is $10, what is the difference in the profit-maximizing price?

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    https://brainmass.com/economics/pricing-output-decisions/price-output-determination-511741

    Solution Summary

    This solution shows how to calculate the difference in the profit-maximizing price for a certain product.

    $2.49

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