The firm's use of advertising is motivated:
A)by its desire to capture more surplus through shifting the demand curve to the right for its products.
B)by a desire to position itself in the marketplace as a monopolist.
C)through media manipulation and really is not cost effective.
D)only when the firm is in a perfectly competitive industry.

Question

Quizplus · Accepted Answer

The firm's use of advertising is motivated by its desire to capture more surplus through shifting the demand curve to the right for its products. This can be achieved through increasing brand recognition, creating a perceived product differentiation, or highlighting the benefits of the product to potential customers. Ultimately, the goal is to increase demand and capture a larger share of the market, which can lead to increased profits. The firm's use of advertising is motivated by its desire to capture more surplus through shifting the demand curve to the right for its products. By making consumers more aware of their products and creating a desire for them, firms are able to sell more at a higher price. This results in increased profits and more surplus for the firm.

The Firm's Use of Advertising Is Motivated