Question

Why might a purely competitive industry advertise, even if individual firms do not? Choose one
A. An industry cannot advertise because it is not an actual business.
B. An industry would never advertise in a purely competitive market.
C. An industry can advertise to promote its products without shifting the average total cost curve for individual firms.
D. The industry can selectively promote firms and force some out of business.
E. The industry hopes to boost overall demand for the substitute goods.

Answer 1

Answer:

B. An industry would never advertise in a purely competitive market.

Explanation:

A purely competitive market is one where the products being sold are nearly the same, that is they are standardised.

It is also called perfect competition.

Sellers are unable to differentiate their products from others. So there is no point advertising in this type of market because this only increases marginal cost of the firms.

Advertising effort for standardised products will have little effect on consumer choice.

In this type of market the price is determined by what the buyer is willing to pay.

Answer 2

The purely competitive industry advertise, even if individual firms do not is because of

B. An industry would never advertise in a purely competitive market.

The following information regarding the purely competitive market is:

• It is the market where the products are sold are of similar nature. It increase the marginal cost.
• It is also known as the perfect competition.
• Since the products are homogeneous so advertising is not needed.

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