The two models that are commonly used to explain the relationship between advertising and sales are the:
A) concave-downward function and the S-shaped response function
B) S-shaped response function and the concave-upward function
C) marginal utility function and the S-shaped demand function
D) S-shaped demand function and the convex-downward function

Question

Quizplus · Accepted Answer

The concave-downward function and the S-shaped response function are the two models commonly used to explain the relationship between advertising and sales. The concave-downward function suggests that the impact of advertising on sales diminishes at higher levels of advertising spend, while the S-shaped response function suggests that initial advertising efforts have little impact, followed by a period of significant impact, and then diminishing returns at higher levels of advertising.

The Two Models That Are Commonly Used to Explain the Relationship