In a monopolistically competitive market if the additional revenue generated from advertising equals the additional cost of advertising, the firm should

A) advertise more to increase sales.
B) advertise more to lower marginal costs.
C) maintain its current amount of advertising.
D) advertise less to decrease costs.


C

Economics

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Given the demand curve in Figure 5-24, explain how consumer’s surplus is calculated.

What will be an ideal response?

Economics

The convergence theory predicts that:

A. even if countries differ in their rates of savings, population growth, and other features, they will still converge to the same growth rate, although not the same level of income. B. countries that start out poor should initially grow faster than ones that start out rich, but will eventually slow to the same growth rate. C. poor countries are not generally expected to sustain a high growth rate and surpass the existing rich countries. D. All of these are predicted by the convergence theory.

Economics

If the government removes a binding price floor from a market, then the price paid by buyers will

a. increase, and the quantity sold in the market will increase. b. increase, and the quantity sold in the market will decrease. c. decrease, and the quantity sold in the market will increase. d. decrease, and the quantity sold in the market will decrease.

Economics

Which of the following assumptions best explains how people make decisions, according to economists?

a. People make the best choice they can because they do not want to make themselves worse off. b. Money incentives matter the most because no matter how much people have they want more. c. Few people are systematic about decision making, and many disregard their own values. d. Individuals consider past experiences but fail to evaluate expected future circumstances.

Economics