The reason why firms in perfect competition do not advertise is because
A) their demand curves are all downward sloping and if they sell more it would have to be at a lower price
B) they differentiate themselves, as with milk
C) they are typically small in size and cannot produce for a wider market
D) there is no entry into the industry
E) there is no product differentiation among the goods produced

Question

Quizplus · Accepted Answer

In perfect competition, firms produce identical products, meaning there is no product differentiation. This makes advertising unnecessary since consumers perceive products from different firms as perfect substitutes.

The Reason Why Firms in Perfect Competition Do Not Advertise