The calculation of the AED will produce a value. This value will indicate some of the characteristics of the good. For instance;·A value over 1 implies a relatively elastic demand. In other words, an increase in the level of advertising will cause a proportionately greater increase in the demand for the good. ·A value less than 1 implies a relatively inelastic demand. In other words, an increase in the level of advertising will cause a proportionately smaller increase in the demand for the good. The sign indicates how advertising influences the demand. …
