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5. Using a graph, explain why a firm with market power might not want to spend...

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Economics

5. Using a graph, explainwhy a firm with market power might not want to spend money onadvertising, even if such an expenditure would shift the firm’sdemand curve to the right.

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Firms may not want to spend money on advertising because theinvestment may not pay off Though advertising may boost the demandof a particular product especially if it is new rather than amature product it is also an expensive investment Thus theincrease in revenues due to the ad campaign may just not be enoughto compensate for the costs incurred with the campaignThis decision    See Answer
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