Pepsi and Coke both have reached the point that investing more dollars in advertising yields lower and lower increases in sales. The model used to illustrate this concept is:
A) decay effects
B) threshold effects
C) concave downward function
D) carryover effect

Question

Quizplus · Accepted Answer

The concave downward function, also known as the diminishing returns model or the law of diminishing marginal returns, explains that as the level of input increases, the output increases at a decreasing rate. In the case of Pepsi and Coke, investing more dollars in advertising will lead to lower and lower increases in sales, as the market becomes saturated and consumers reach their threshold for purchasing the product.

Pepsi and Coke Both Have Reached the Point That Investing