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?

Question

Quizplus · Accepted Answer

When the marginal cost of advertising ($1.3 million) exceeds the marginal benefit ($1 million), the firm should reduce advertising to increase net profit, as spending more on advertising than the benefit it brings reduces overall profitability.

Good Boy Super Treats Produces Healthy Treats for Dogs