The S-shaped response function implies that:
A)initial advertising expenditures will have little impact on sales.
B)advertising expenditures will have major impact on sales.
C)sales effects will follow the microeconomic law of diminishing returns.
D)sales will immediately increase then decrease.
E)sales will immediately decrease then increase.

Question

Quizplus · Accepted Answer

The S-shaped response function suggests that at low levels of advertising expenditure, there is little impact on sales, indicating an initial flat response. As spending increases, sales begin to rise more significantly, showing a positive response, before eventually leveling off again as diminishing returns set in.

The S-Shaped Response Function Implies That