Question

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 is only used in the monopolistic competition market structure. @ c. It attempts to increase demand and to make demand more inelastic. d. It reduces barriers to entry in a market.

Answer 1

Answer 1:

Correct answer is:

c. Advertising attempts to increase demand and to make demand more inelastic

Explanation:

Statement a is incorrect since advertisement does not always succeed in increasing demand.

Statement b is incorrect it is used in other market structures also.

Statement c is correct since advertisement attempts to increase demand and to reduce demand elasticity.

Answer 2:

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