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Advertising is an important input into marketing most consumer products. Explain why the profit generated by an additional dollar of advertising will diminish with the total amount of advertising.
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Advertising is an important input into marketing most consumer products. Explain why the profit generated by an additional dollar of advertising will diminish with the total amount of advertising.
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This phenomenon happens due to the law of diminishing marginal utility. In advertising, the law of diminishing returns means that after sufficient saturation, each further dollar spent is less effective than the last.
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As an example, consider a very thirsty man that is offered a glass of ...
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