Why do firms in a monopolistically competitive industry advertise? Research a fi

Question

Why do firms in a monopolistically competitive industry advertise? Research a firm you feel would be in monopolistic competition and explain their advertising scheme in a short summary. Be sure and cite your reference. How is collusion used in oligopoly markets? What is a cartel? Are they legal? Give one example of either collusion or a cartel that has occurred in the past. Given the following graph for a monopolist, answer the questions provided: What is the optimum output level that this monopolist would want to produce? What price will the monopolist want to charge? What is the amount of profit that this monopolist will receive?

Explanation / Answer

Q.8. A monopolistic market is that kind of market where large number of sellers and large number os buyers exist. Unlike perfect competition, the product that is being sold in monopolistic market is of hetrogenous nature. It means firms in this market sells similar not same product. That is if there is a soap selling market, a firm may sell an antisceptic soap, another may sell an aroma filled soap, third one may sell a beauty soap and so on. Hence the price are set by firms not by industry based on the good they offer, the type ofs egment they serve and demand of their good.

Amidst of huge number of sellers which sell differentiated but similar product, for a firm it is very essential to make its own image in the eye of consumer and to differetiate itself from others with some special attributes so that it can induce a consumer to purchase its product rather than others'. For such reasons, it is neccesitate to advertise. Without advertising one may not get place in eye of consumer and in consumers' alternative options.

Lets talk about marketing of Dettol soap Dettol soap represents itself a bathing soap that kills germ 99%. It has always advertised that getting protection from germs through bathing is must and is aids by the soap. The fear of consumers to fall ill have been targetted in various advertisements to induce consumers to purrchase such soap for bathing rather than a beauty or other kind of soap.

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