Question

Illustrate and explain the two distinct demand curves facing Chamberlin’s monopolistically competitive firm, and explain Chamberlin’s...

Illustrate and explain the two distinct demand curves facing Chamberlin’s monopolistically competitive firm, and explain Chamberlin’s view of the role of advertising in monopolistic competition.

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According to chamberlin the advertisements leads to new market structure, they lead to increase in the sales of the given product; and thus they affect the demand curve, advertising strategies include product differentiation, and this product differentiation provides the company a monopoly over there products and thus makes pure competition impossible. This advertisement costs are included in the selling cost and not considered as factor cost

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