12.7 Advertising
You can fool all the people all the time with a big enough advertising budget.
In addition to setting its price or quantity, a monopoly has to make other decisions, one of the most important of which is how much to advertise to maximize its net profit. As we will show, the rule for setting the profit-maximizing amount of advertising is the same as that for setting the profit-maximizing amount of output: Set advertising or quantity where the marginal benefit (the extra gross profit from one more unit of advertising or the marginal revenue from one more unit of output) equals its marginal cost.
Advertising is only one way to promote a product. Other promotional activities include providing free samples and using sales agents. ...
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