Good Boy Super Treats produces healthy treats for dogs. At its current advertising level, Good Boy Super Treats marginal cost of advertising is $1 million and their marginal benefit is $1.2 million. Which of the following is true?
A) The firm should reduce the amount of advertising to increase its net profit.
B) The firm is currently maximizing its net profit.
C) If the firm increases the amount of advertising, its net profits will decrease.
D) The firm should increase the amount of advertising to increase its net profit.
D) The firm should increase the amount of advertising to increase its net profit.
You might also like to view...
Inflation makes money an imperfect store of value
Indicate whether the statement is true or false
Economist Milton Friedman's theory of money demand is based on the supposition that money has a very ________ range of substitutes, giving monetary policy a ________ effect on aggregate demand
A) wide, strong B) wide, weak C) narrow, strong D) narrow, weak
Suppose First National Bank makes a one-year simple loan of $1,000 at 7% interest to Harry's Restaurant. At the end of one year Harry's Restaurant will pay First National
A) $934.58. B) $1007. C) $1700. D) $1070.
The relationship between advertising and product differentiation is
a. positive; the more differentiated the product, the more a firm is likely to spend on advertising. b. negative; the more differentiated the product, the less a firm is likely to spend on advertising. c. zero; there is no relationship between product differentiation and advertising. d. irrelevant; firms with differentiated products do not need to advertise.