Run,a sports shoe manufacturing company,began its campaign by spending $1 million on advertising.Currently,Run spends $200 million on advertising.Initially,the advertisements contributed to the gradual increase in returns,but the company now confronts diminishing returns.In this scenario,which of the following phenomena explains Run's diminishing returns?

Question

Quizplus · Accepted Answer

The advertising response function explains diminishing returns as it describes how the effectiveness of advertising decreases after a certain level of spending, leading to less additional sales per dollar spent.

Run,a Sports Shoe Manufacturing Company,began Its Campaign by Spending $1