When Using the Competitive Parity Budgeting Method,the Firm

question 86

Multiple Choice

When using the competitive parity budgeting method,the firm:

• A)matches its share of total industry advertising expenditures to its market share.
• B)spends as much as it can.
• C)allocates some portion of planned sales for the period to advertising.
• D)spends the same total amount as its major competitors spend.
• E)bases its advertising and promotion expenditures on sales.

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Definitions:

Long Run

A period in economics where all factors of production and costs are variable, allowing all inputs to be adjusted.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a business to expand its output.

Isoquants

A curve representing all combinations of inputs that give the same level of output.

Production Function

An equation that describes the relationship between inputs and the maximum output that can be produced.