To maximize profits, managers should purchase the quantity of advertising that maximizes gross profit.

Question

Quizplus · Accepted Answer

Maximizing profits involves not just increasing gross profit by raising sales through advertising but also considering the costs of advertising itself. The optimal quantity of advertising is where the marginal cost of advertising equals the marginal revenue generated from it, not necessarily where gross profit is maximized.

To Maximize Profits, Managers Should Purchase the Quantity of Advertising