In a monopolistically competitive market, a firm should advertise to the point at which
A. it is selling the most units it can possibly sell.
B. the additional revenue generated by one more dollar of advertising just equals the extra dollar cost of advertising.
C. it can raise price to the highest level possible.
D. the extra revenue from an additional dollar spent on advertising just equals the marginal cost of producing one more unit of the good.
Answer: B
You might also like to view...
When the interest rate rises
A) planned investment falls. B) planned investment rises. C) planned investment will be unaffected. D) equilibrium income increases.
Suppose the government borrows to purchase military ammunition which is immediately used up in target practice. The rate of return on this investment is ________, and in this case the government debt ________ a burden on future taxpayers
A) r, is not B) r, is C) 0, is not D) -r, is not E) -r, is
A problem associated with the principal-agent relationship is
A) imperfect information. B) perfect information. C) the low costs of monitoring behavior. D) none of these choices.
Which of the following combinations would result in an INCREASE in $ sales of Honda Civics for Honda of Ames based on different combinations of the own P elasticity of D for Civics and how the firm changes its P of Civics?
a) D is elastic, decrease P b) D is inelastic, raise P c) D is unitary, keep P the same d) A and B e) None of the above