Question

If each of two competing monopolists undertakes equally successful advertising efforts to attract consumers away from the other, the total result is ________.
a. they will both increase market share
b. they will both improve their industrial position
c. they will simply neutralize one another's efforts

Answer 1

Answer:

C. They will simply neutralize one another's effort.

Explanation:

Neutralizing each others efforts is one of the market effects that happens when two monopolist tend to take same advertising effort; and this plays out to their disadvantage.

Another disadvantage in monopolistic competition is that companies in order to differentiate their products from other companies add irrelevant features and do not concentrate on improving the basic product which in turn results in consumers paying extra for added features but in reality that feature of product does not result in increase in consumer surplus.