Perfectly competitive firms tend to invest heavily in advertisements because it increases their revenue.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms cannot influence the market price and are price takers. Therefore, investing heavily in advertisements will not increase their revenue as they cannot charge a higher price for their product. It may increase their market share, but this may not necessarily translate into higher revenue.

Perfectly Competitive Firms Tend to Invest Heavily in Advertisements Because