Since advertising increases a firm's average total cost,consumers ultimately pay for the cost of advertising in the form of a higher price in the long run.It is not possible for a firm to end up with a lower profit-maximizing price as the result of advertising.

Question

Quizplus · Accepted Answer

Advertising can attract more customers and increase a firm's revenue, which can lead to economies of scale and lower average total cost in the long run. This can result in a lower profit-maximizing price for the firm. However, whether or not this happens depends on the specifics of the industry and competition.

Since Advertising Increases a Firm's Average Total Cost,consumers Ultimately Pay