Executives should spend an additional dollar on an activity if consumers value it by more than a dollar as it results in a net gain for the company by creating additional value for customers. This concept is known as the consumer surplus, and it is crucial for companies to identify the activities that generate positive consumer surplus to maximize their profits.

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Executives Should

Question 10

Multiple Choice

Executives should

A) spend an additional dollar on an activity if consumers value it by more than a dollar.
B) do more of something if marginal revenue is positive.
C) pend an additional dollar on an activity if consumers value it by less than a dollar.
D) do more of something if average revenue is greater than zero.

Correct Answer: