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ECON 402 Final || Questions and 100% Verified Answers.
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  • ECON 402

For a firm with market power, advertising expenditures affect all of the following except which one? correct answers Marginal Cost If a firm spends money on advertising, its gross profit is _____ its net profit. correct answers greater than In general, the marginal benefit of advertising ____...

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  • August 16, 2024
  • 4
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • for a firm with market power advertising expendit

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  • ECON 402
  • ECON 402

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ECON 402 Final || Questions and 100% Verified Answers.
For a firm with market power, advertising expenditures affect all of the following except which
one? correct answers Marginal Cost

If a firm spends money on advertising, its gross profit is _____ its net profit. correct answers
greater than

In general, the marginal benefit of advertising ________ as more advertising is purchased
because the gross profits from advertising ________ at a(n) ________ rate. correct answers
Decreases; increase; decreasing

Good Boy Super Treats produces healthy treats for dogs. At its current advertising level, Good
Boy Super Treats marginal cost of advertising is $1.3 million and their marginal benefit is $1
million. Which of the following is true? correct answers The firm should reduce the amount of
advertising to increase its net profit.

Pretty Polly produces dresses for little girls. At its current advertising level, Pretty Polly's
marginal cost of advertising is $500,000 and their marginal benefit is $500,000. Which of the
following is true? correct answers The firm is currently maximizing its net profit.

Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery
stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery
stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs
$2,000 and a unit of advertising on the radio costs $5,000. At their current advertising levels, the
marginal benefit of advertising in the flyer is $2,500 and the marginal benefit of advertising on
the radio is $5,000. Which of the following is true? correct answers To maximize profits,
Franco's should increase the amount of advertising in flyers.

Perfect Shots is company specializing in wedding photos and they have a fixed advertising
budget. Perfect Shots advertises on the radio and the television and it costs $5,000 per unit of
radio advertising and $15,000 per unit of television advertising. At their current advertising
levels, the marginal benefit from radio advertising is $4,800 and the marginal benefit from
television advertising is $15,250. To optimally allocate their advertising budget, Perfect Shots
should ________. correct answers decrease the amount of advertising in radio and increase the
amount of advertising in television

The table shows the current costs for a firm to advertising on the radio, television, and
newspaper.

Radio Television Newspaper
Price
$10,000 (Radio)
$15,000 (TV)
$8,000 (Newspaper)
Marginal Benefit of Advertising

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