Question

Should a perfectly competitive firm advertise in an effort to increase its sales and it's profit? Why or why not? What about a monopoly? Should a monopoly advertise? Why or why not?

Answer 1

No, the goods that are sold in the perfectly comeptitive market are homogeneous i.e. they are all the same with no difference in them, so, if a firms is advertising then the cost of doing business for this firm will increase and they cannot raise the price of the goods as it is decided by the market, keeping the price same and increasing the cost will cause the firms loss and demand for the single firm will not increase as all the goods are same in the market.

For a monopoly, it is the only firm available with the good that has no substitute in the market. people will demand it no matter what so there is no point in advertising for those goods.