Question

With an increase in marketing expenditure, market demand ______. A) continues to increase at an increasing rateB) initially increases and then declinesC) increases first at an increasing rate, then at a decreasing rateD) decreases first and then spikesE) continues to increase at a decreasing rate

Answer 1

Answer:

C) increases first at an increasing rate, then at a decreasing rate.

Explanation:

When marketing expenditure is increased, this will lead naturally to an increase in market demand. This increase in market demand is an increasing one. For example successive increase in demand can be 2, 4, 8, 15.

At a point when diminishing utility sets in the customers are maximising utility and need less of the product. Demand will increase at a decreasing rate. For example 30, 40, 46, 50, 52.