The two models that are commonly used to explain the relationship between advertising and sales are the:
A) S-shaped response function and the concave-upward function
B) marginal utility function and the S-shaped demand function
C) S-shaped demand function and the convex-downward function
D) concave-downward function and the S-shaped response function

Question

Quizplus · Accepted Answer

The two models commonly used to explain the relationship between advertising and sales are the concave-downward function and the S-shaped response function. The concave-downward function suggests that initial advertising expenditures yield significant increases in sales, but the rate of sales increase diminishes as advertising spending continues to rise. The S-shaped response function suggests that there is a threshold level of advertising below which there is little to no effect on sales, a middle range where sales increase at an increasing rate with advertising, and a high level of advertising beyond which sales increase at a diminishing rate.

The Two Models That Are Commonly Used to Explain the Relationship