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Your company operates in a perfectly competitive market. Your Manager told you that advertising can help...

Your company operates in a perfectly competitive market. Your Manager told you that advertising can help you increase your sales in the short run. What kind of advertising campaign you will start for your product and how much gain is expected from an effective advertisement?

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Answer #1

It can actually be mentioned that perfectly competitive market no amount of advertising would actually get to improve the level of sales because of the fact that the product is itself homogeneous where the buyers and sellers have perfect information about the product and also the price would be constant irrespective of the quantity and as a result of this the most convenient seller would be chosen by the buyer and not due to advertising as a result of which it would be an additional cost but there would be no potential gain from it and that is the reason why instead of advertising pushing the product might get to help all in all.

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