Pepsi and Coke both have reached the point that investing more dollars in advertising yields smaller increases in sales. Which is present?
A)Decay effects
B)Threshold effects
C)Concave downward function
D)Carryover effect

Question

Quizplus · Accepted Answer

A concave downward function refers to a situation where as more resources (such as advertising dollars) are invested, the returns on those investments decrease. This means that both Pepsi and Coke have reached the point where additional advertising dollars will only result in smaller and smaller increases in sales, which is consistent with a concave downward function. Decay effects refer to the decrease in effectiveness of advertising over time, threshold effects refer to a minimum level of advertising necessary to produce a response, and carryover effects refer to the persistence of advertising effects beyond the period of time in which the advertising was delivered. None of these concepts accurately describe the situation between Pepsi and Coke's advertising and sales.

Pepsi and Coke Both Have Reached the Point That Investing