If the increased cost is equal to the incremental (marginal) return, what should the spending level be?

Holding the spending level is the appropriate course of action when the increased cost is equal to the incremental return. This scenario indicates that the investment in marketing is producing just enough return to cover its costs, meaning there is no excess profit being gained from further expenditure. Therefore, maintaining the current spending level ensures that the business neither loses money nor fails to capitalize on potential returns.

When costs and returns are perfectly aligned, escalating spending could lead to diminishing returns, whereas decreasing spending could compromise returns that just cover the expenses. Hence, holding the spending level is a strategic choice to maintain profitability without risking losses or wasted expenditures.