If identical firms sell an undifferentiated product,advertising is likely to be
A) used to attack the rivals' products.
B) collectively undertaken by the industry group.
C) strategically aimed at deterring entry.
D) focused on secret ingredients.

Question

Quizplus · Accepted Answer

If identical firms sell an undifferentiated product, advertising is less effective in promoting the product or attacking the rivals' products. Instead, firms may pool their resources and collectively undertake advertising to create brand awareness and promote the industry as a whole. This can increase demand for the product and reduce the likelihood of new entrants, thereby supporting the industry's pricing power.

If Identical Firms Sell an Undifferentiated Product,advertising Is Likely to Be