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 $2,000 and a unit of advertising on the radio costs $6,000. At their current advertising levels, the
marginal benefit of advertising in the flyer is $1,500 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true?
A) Franco's is currently maximizing its profits from advertising.
B) To maximize profits, Franco's should increase the amount of advertising in flyers and on the radio.
C) To maximize profits, Franco's should decrease the amount of advertising in flyers and on the radio.
D) To maximize profits, Franco's should increase the amount of advertising in flyers, but not change the amount of advertising on the radio.
C) To maximize profits, Franco's should decrease the amount of advertising in flyers and on the radio.
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