Question

For each of the following pairs of firms, indicate which firm would be more likely to engage in advertising. Pairs of Firms More Likely to Engage in Advertising A family-owned farm or a family-owned restaurant A manufacturer of forklifts or a manufacturer of cars A company that invented a very comfortable razor or a company that invented a less comfortable razor

Answer 1

Answer:

a family-owned restaurant

a manufacturer of cars

A company that invented a very comfortable razor 

Explanation:

A family owned resturant is an example of a monpolistically competitive firm. A monpolistically competitive firm is characterised by many firms selling differentiated products. Advertising is one of the ways to attract customers to the restaurant.

A family owned farm is an example of a perfectly competitive firm. A perfectly competitive firm is characterised by many firms selling homogenous products. Thus, it won't be so necessary for a farm to advertise since its product is homogenous.

A car manufacturer exists in a monopolistic market. A monpolistically competitive firm is characterised by many firms selling differentiated products. Advertising is one of the ways to attract customers to purchase cars.

Forklifts aren't so differentiated. Therefore, there would be little need to advertise.

A manufacturer of a very comfortable razor should advertise his product to inform and attract customers. The manufacturer of a uncomfortable razor has no need to advertise.

I hope my answer helps you.