A profit-maximizing firm should spend an additional dollar on advertising so long as this expenditure results in more than one dollar of
A)additional sales.
B)reduced costs.
C)increased profits.
D)demand.

Question

Quizplus · Accepted Answer

A profit-maximizing firm should continue to spend an additional dollar on advertising as long as the marginal benefit of that dollar exceeds its cost. The correct measure of benefit in this context is increased profits, not just additional sales, reduced costs, or increased demand, because profits directly reflect the firm's ultimate goal of maximizing financial returns.

A Profit-Maximizing Firm Should Spend an Additional Dollar on Advertising