A firm should increase expenditures on marketing and product variation up to the point where an additional dollar spent generates a marginal revenue of no less than one dollar.

Question

Quizplus · Accepted Answer

This statement is based on the principle of marginal analysis, which suggests that optimal decision-making involves continuing an activity up to the point where the marginal benefit (revenue in this case) equals the marginal cost. Spending more on marketing and product variation is justified as long as the additional revenue generated by these activities is at least equal to the cost incurred, ensuring efficient allocation of resources.

A Firm Should Increase Expenditures on Marketing and Product Variation