EBK ECONOMICS FOR TODAY
EBK ECONOMICS FOR TODAY
9th Edition
ISBN: 8220101414250
Author: Tucker
Publisher: Cengage Learning US
Question
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Chapter 8, Problem 1SQP
To determine

Competitive firm and advertising.

Expert Solution & Answer
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Explanation of Solution

A perfectly competitive firm will not advertise. Under perfect competition, all the firms sell identical or homogenous products. Thus, advertisements cannot influence the consumer preferences of products sold by different firms.

Economics Concept Introduction

Perfect competition: Perfect competition is the market structure where there are large number of buyers and sellers in the market selling the identical products at the market at determined price level. Thus, the firms in the perfect competition will be the price takers.

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