Critics claim that when advertising decreases the elasticity of demand,firms are able to do which of the following

Question

Quizplus · Accepted Answer

When advertising decreases elasticity of demand, it means that consumers are becoming less sensitive to changes in price. This allows firms to charge a larger markup over marginal cost since consumers are willing to pay more for the product without decreasing their demand significantly. Therefore, a larger markup can result in higher profits for the firm.

Critics Claim That When Advertising Decreases the Elasticity of Demand,firms