We May Be Tempted to Determine the Optimal Level of Advertising

Multiple Choice

We may be tempted to determine the optimal level of advertising expenditures at the point where the last dollar spent on advertising generates an additional dollar of sales revenue (i.e, the marginal revenue of advertising equals one) . In general, this rule will not allow the firm to maximize profits because it ignores the:

A) price elasticity of demand.
B) marginal cost of additional sales generated by the advertising.
C) advertising-to-sales ratio.
D) fixed costs of advertising.