On average, EA _ (2.4 + 3.6)/2 _ 3 and demand will rise 3%, with a 1% increase in advertising. Thus, demand appears quite sensitive to advertising.

C. In calculating the arc price elasticity of demand, only consider consecutive months when there was a change in the price of sports watches, but no change in advertising or the price of dress watches:


_ 5,500 - 4,500 x $24 + $26 $24 - $26 5,500 + 4,500

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