Assertion (A): In perfect competition, firms spend heavily on advertising.
Reason (R): Products of all firms are identical.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A is false: with identical products and a given price, advertising cannot win a firm a higher price.
R is true, and it is why advertising is pointless here.

Concept: No advertising in perfect competition
Typical timeTypical: 100 s
Your timeYours: —

The rule this testsFeatures of perfect competition

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Ten questions from Perfect Competition & Supply, at your own pace.

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Ten questions from Perfect Competition & Supply, at your own pace.

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Assertion (A): In perfect competition, firms spend heavily on advertising.Reason (R): Products of all firms are identical.

Explanation

Assertion (A): In perfect competition, firms spend heavily on advertising.
Reason (R): Products of all firms are identical.