Good Boy Super Treats produces healthy treats for dogs. At its current advertising level, Good Boy Super Treats marginal cost of advertising is $1.3 million and their marginal benefit is $1 million. Which of the following is true?
A) The firm should increase the amount of advertising to increase its net profit.
B) The firm should reduce the amount of advertising to increase its net profit.
C) If the firm decreases the amount of advertising, its net profits will decrease.
D) The firm is currently maximizing its net profit.
B) The firm should reduce the amount of advertising to increase its net profit.
You might also like to view...
Rates of substitution are determined by:
A. the consumer's income. B. the consumer's preferences. C. the number of available consumption bundles. D. the prices of different goods.
Paul Samuelson, a famous economist, said that
a. "the bond market has predicted zero out of the past nine recessions.". b. "the stock market has predicted zero out of the past nine recessions.". c. "the bond market has predicted nine out of the past five recessions.". d. "the stock market has predicted nine out of the past five recessions.".
The defining characteristic of a natural monopoly is
a. constant marginal cost over the relevant range of output.
b. economies of scale over the relevant range of output.
c. constant returns to scale over the relevant range of output.
d. diseconomies of scale over the relevant range of output.
Which of the following characteristics of the monopolistically competitive and the perfectly competitive market will cause the firm to earn zero profits in the long run?
A. no barriers to entry B. many buyers C. price taker D. homogeneous product