Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $1,500 and a unit of advertising on the radio costs $4,500. At their current advertising levels, the
marginal benefit of advertising in the flyer is $1,750 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true?
A) To maximize profits, Franco's should increase the amount of advertising in flyers and on the radio.
B) To maximize profits, Franco's should increase the amount of advertising in flyers, but not change the amount of advertising on the radio.
C) Franco's is currently maximizing its profits from advertising.
D) To maximize profits, Franco's should decrease the amount of advertising in flyers and on the radio.
A) To maximize profits, Franco's should increase the amount of advertising in flyers and on the radio.
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The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of a
A) marginal statement. B) normative statement. C) rational-decision statement. D) macroeconomic statement. E) positive statement.
Monopolistic competition is characterized by: a. one firm selling several products
b. many firms selling the same product. c. many firms selling slightly different products. d. one firm selling one product.
In equilibrium under monopolistic competition: a. firms always earn profits in the short run
b. firms always suffer losses in the short run. c. output is at the socially efficient level in the long run. d. marginal revenue is less than price.
Consumer expectations and a positive business sentiment would boost
A. investment through aggregate supply. B. investment through aggregate demand. C. government spending. D. investment through aggregate demand and aggregate supply.