For a profit- maximising firm, the amount it should spend on advertising should be that where the average cost of the advertising equals the average revenue earned from it.

Question

Quizplus · Accepted Answer

For a profit-maximizing firm, the optimal amount to spend on advertising is where the marginal cost of advertising equals the marginal revenue earned from it, not the average cost and average revenue.

For a Profit- Maximising Firm, the Amount It Should Spend