Question: Why is advertising prevalent in many oligopolies especially whe

Why is advertising prevalent in many oligopolies, especially when industry demand is inelastic? Illustrate your answer by assuming that with advertising, a firm’s demand curve has price elasticity of -1.5 and without advertising, it is -2. If MC is $10, what is the difference in the profit-maximizing price?


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  • CreatedAugust 05, 2013
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