Question

MICROECONOMICS

1. How does Advertising affect a monopolist Competitive market?  Be specific and define your terms.

Answer 1

Monopolistic market type in which -

There are large number of sellers and buyers in the market .

there are few entry barriers .

product are slightly differentiated in terms of Shape ,size colour .

As seen above that products are differentiated so here advertising comes into the picture.

Advertising is the phenomena of information provided by the company about the product through various communication channels like television, radio, magazine ,internet to promote its brand and product

advertising in monopolistic is basically done to control the market and for product differentiation.

for example in restaurant market ,as we all know that it is a monopolistic market because every restaurant serves the food but where they are differentiated are on the basis of taste ,quality ,service of the food.

So they try to promote and advertise on the basis of these factors to differentiate from the competitors