The quantity of advertising that maximizes the industrywide joint profit, is the quantity that sets the industry wide marginal benefit equal to the marginal cost.

Question

Quizplus · Accepted Answer

The statement is true. When the industrywide marginal benefit of advertising equals the marginal cost, the joint profit of the industry is maximized. This is because any additional advertising beyond this point would generate marginal costs that exceed marginal benefits and would reduce profits.

The Quantity of Advertising That Maximizes the Industrywide Joint Profit