Question

Almost everything you buy includes a selling cost component that exceeds one-half of the total costs. Your clothing, food, DVD’s, and your textbook for this course cost more to sell than they cost to produce.

Why are selling costs so high? In other words, what is "bundled in" to the cost of your product beyond profit, labor, transport, and raw materials? In your response, consider what firms must do to differentiate their product from others on the market, starting with product conception and ending in consumer purchase.

Answer 1

The monopolistic competition firms produce differentiated products the products are substitutes for each other but they are differentiated goods based on size, quality, color, brand name etc. The firm main strategies are to differentiate their goods from competitors by using "Advertising" this involves heavy cost on the firm. Examples paying huge money to Brand Ambassadors, Advertising Hoardings, Regular payment to the media channels.

Thus through this way monopolistic firm differentiated their goods with competitors.And It involves heavy cost firms.