Which of the following is (are) true?
A) There is no role for advertising in perfect competition.
B) Firms in monopolistic competition and oligopoly use advertising in expectation of increasing profit.
C) Advertising has costs but few, if any, benefits.
D) A and B are true.

Question

Quizplus · Accepted Answer

In perfect competition, products are homogeneous and firms are price takers, leaving no room for advertising to influence demand. In monopolistic competition and oligopoly, firms use advertising to differentiate their products and potentially increase market share and profits, making statements A and B true. Statement C is incorrect because advertising can have several benefits, such as increasing consumer awareness and influencing preferences.

Which of the Following Is (Are) True