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PROMOTIONAL ELASTICITY OF DEMANDS

PROMOTIONAL ELASTICITY OF DEMANDS. Presented by Bharat Kumar Sahoo. Advertisement-Expenses for increase sale. Degree of responsiveness of quantity demand (sales) to change in advertisement expenditure. Mathematically ,. 2 cases. e A >1 & e A <1. Change in Q due to change in A.

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PROMOTIONAL ELASTICITY OF DEMANDS

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  1. PROMOTIONAL ELASTICITY OF DEMANDS Presented by Bharat Kumar Sahoo

  2. Advertisement-Expenses for increase sale Degree of responsiveness of quantity demand (sales) to change in advertisement expenditure

  3. Mathematically,

  4. 2cases eA>1 & eA<1

  5. Change in Q due to change in A

  6. Calculation • Q=400000 • A=20000000 • Q1=650000 • A1=30000000 • AED=Δq/Δa × a/q • 250000/10000000 × 20000000/400000 • =1.25 • eA>1,so producer should go for a heavy advt. expenditures

  7. Calculation • Q=400000 • A=20000000 • Q1=750000 • A1=40000000 • AED=Δq/Δa × a/q • 350000/20000000 × 20000000/400000 • =0.87 • EA<1,so producer shouldn’t go for a heavy advt. expenditures

  8. conclusion • So we can conclude that advertisement puts a great effect on quantity demand. It plays a crucial role in decision making regarding the expenses of a company towards advertisements.

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