Which of the following is 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)There is no role for advertising in perfect competition, and firms in monopolistic competition and oligopoly use advertising in expectation of increasing profit.

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers and cannot influence the market price through advertising. However, firms in monopolistic competition and oligopoly have some degree of market power and can use advertising to differentiate their products and increase demand. Therefore, advertising has a role in these market structures but comes with costs. Hence option D is the correct choice.

Which of the Following Is True