Firms decide how much to spend on product development and marketing by
A) spending the same amount as they did in previous years.
B) spending the historical average of 1/4 of total production cost.
C) determining what it will take to eliminate excess capacity.
D) balancing the cost and the benefit of product development and marketing.
E) ensuring that the marginal cost of product development and marketing is less than or equal to the marginal cost of producing the good or service.

Question

Quizplus · Accepted Answer

Firms need to weigh the costs and benefits of product development and marketing to determine how much to spend. Spending too much can lead to financial losses, while spending too little can lead to missed opportunities for growth and market share. By balancing the costs and benefits, firms can make informed decisions about how much to spend on these activities.

Firms Decide How Much to Spend on Product Development and Marketing