Which of the Following Statements Is True About Advertising by a Monopolistically

question 72

Multiple Choice

Which of the following statements is true about advertising by a monopolistically competitive firm?

• A)Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products.
• B)Advertising could make the monopolistic competitor's demand more inelastic, but advertising has no effect on a perfect competitor's demand.
• C)Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm's product.
• D)Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry.

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Definitions:

Accumulated Depreciation-Building

The total amount of depreciation expenses that have been charged against a building asset over its useful life, reducing its book value.

Advertising Expense

The costs incurred in promoting products or services to potential customers through various media outlets.

Cost of Goods Sold

Cost of Goods Sold (COGS) is the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Miscellaneous Expenses

Expenses that don't fit into any specific category within the company's budget, often small or irregular in nature.