Question: The Wilson Company''s marketing manager has determined that the price elasticity of demand for its product equals -2.2. According to studies he carried, the relationship between the amount spent by the firm on avertising and its sales is as follows:
Advertising expenditure Sales
$100,000 $1.0 million
$200,000 $1.3 million
$300,000 $1.5 million
$400,00 $1.6 million
a. If the Wilson Company spends $200,000 on advertising, what is the marginal revenue from an extrac dollar of advertising?