Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

Time for an honest moment here, stop and think about how much advertising influences your consumption decisions. When is the last time you can remember choosing one product over another because of...

1 answer below »
  • Time for an honest moment here, stop and think about how much advertising influences your consumption decisions. When is the last time you can remember choosing one product over another because of advertising?

With this question being our starting point, it would be great to see if people can also address the following issues:

  • What role does advertising play in influencing consumption in monopolistic competition?
  • Does the impact of advertising allow for some price leverage by firms in this market structure? Why or why not?
  • Is the United States truly an economy that promotes competition?
  • Think about the markets where major oligopolies exist, for instance soft drinks/fast foods and automobile manufacturing, is there really a free market place or do oligopolies/major corporations dominate our economy?
Answered Same Day May 21, 2021

Solution

Harshit answered on May 21 2021
140 Votes
MICRO-ECONOMICS
In a monopolistic market, there is only one seller present in the market. So, if the product in the market is a necessity goods, then there is no need of advertisement at all but if the product is not a necessity item, then the quantity of sales will depend upon the demand of that product in the market. If the firm wants to increase the price of the product, it can be done through advertising. Artificial demand is created for the product when the product is advertised in the monopolistic market. There is absence of competition in a monopolistic market but the demand of the product is elastic (Machowska, D. and Nowakowski, A., 2019). Therefore the price can be increased but to a certain level wherein the demand of the product is not hampered. Therefore advertisement is beneficial for the firm in a monopolistic market.
Advertisement plays an important role in the monopolistic market when it comes to price leverage. As there is no competition in the market, the price of the product can be increased by created an artificial demand (Aslam, Z., 2019). The price of the product can be increased to the extent the artificial...
SOLUTION.PDF
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here
Attach File