Why Would Perfectly Competitive Industries Advertise Even Though Individual Firms

question 59

Multiple Choice

Why would perfectly competitive industries advertise even though individual firms do not?

• A) Even though the output of an individual firm would be considered homogeneous to other firms,the industry output would be differentiated (for example,Florida orange juice versus imports).
• B) Individual perfectly competitive firms don't need to advertise because they already have market power,but the industry would need to advertise.
• C) Government price supports exist for most perfectly competitive producers,so they don't need to advertise,but industry price supports don't generally exist.
• D) Industries advertise because they pay for commercials and it allows consumers to watch TV and listen to the radio for "free."
• E) Individual firms produce perfectly differentiated output,but the industry produces homogeneous output that needs to be differentiated.

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Definitions:

Appeasement

A conflict resolution strategy where one party attempts to pacify another by conceding to their demands, often to avoid conflict.

Competition

A situation in which individuals or entities strive against each other to achieve a goal that cannot be shared.

Cooperative Reactions

Actions undertaken by individuals or groups that are designed to work together in a mutually beneficial manner.

Ingroup-Outgroup Bias

The tendency to favor members of one's own group (ingroup) over those from different groups (outgroup).