Which of the following statements regarding advertising is correct? Advertising by a _____ seller affects primarily _____.
A)perfectly competitive; demand for the seller's product and not market demand
B)imperfectly competitive; demand for the seller's product more than market demand
C)monopoly; market demand but not demand for the seller's product
D)monopoly; demand for the seller's product but not market demand

Question

Quizplus · Accepted Answer

In imperfectly competitive markets, advertising by a seller primarily affects demand for the seller's product more than market demand. This is because in such markets, there are few or no close substitutes for the seller's product, and so advertising can be used to differentiate the seller's product from others and create brand loyalty among consumers. In contrast, in perfectly competitive markets, advertising is unlikely to have a significant effect on demand, as consumers have many alternative suppliers to choose from and are not likely to be swayed by advertising alone.

Which of the Following Statements Regarding Advertising Is Correct? Advertising