advertising, however, can produce more permanent gains in market share because they cannot be duplicated as quickly and completely as price reductions.Oligopolists have sufficient financial resources to engage in product development and advertising. For most oligopolists, the economic profits earned in the past can help finance current advertising and product development.Positive effects- Advertising is an efficiency-enhancing activity. It is a relatively inexpensive means of providing useful information to consumers and thus lowering their search costs. By enhancing competition, advertising results in greater economic efficiency. By facilitating the introduction of new products, advertising speeds up technological progress. By increasing sales and output, advertising can reduce long-run average total cost by enabling firms to obtain economies of scale.Negative effects- Advertising is sometimes based on misleading and extravagant claims that confuse consumers rather than enlighten them.Indeed, in some cases advertising may well persuade consumers to pay high prices for much-acclaimed but inferior products, forgoing better but unadvertised products selling at lower prices.14.Give one example of how the principles in this chapter currently impact your life or relate to your chosen career. These principles are again important for a potential business owner who may need to engage in competition and rivalry with other firms.
As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.
Temple University Fox School of Business ‘17, Course Hero Intern
I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.
University of Pennsylvania ‘17, Course Hero Intern
The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.
Tulane University ‘16, Course Hero Intern
Stuck? We have tutors online 24/7 who can help you get unstuck.
Ask Expert Tutors
You can ask
You can ask
You can ask
(will expire )