Which of the following is true about advertising by a firm?
A) It is always successful in increasing demand for a firm's product.
B) It attempts to increase demand and to make demand more inelastic.
C) It reduces barriers to entry in a market.
D) It is only used in the monopolistic competition market structure.

Question

Quizplus · Accepted Answer

Advertising is typically used to increase demand for a firm's product and to make demand more inelastic, meaning that consumers are less likely to switch to a competitor's product even if the price increases. However, advertising is not always successful and may not affect demand in some cases. Advertising may also create barriers to entry by increasing brand loyalty and making it more difficult for new firms to compete in the market. Advertising is used in various market structures, including monopolistic competition, oligopoly, and even some forms of perfect competition.

Which of the Following Is True About Advertising by a Firm