Final answer:
The best description of the role of advertising in a competitive industry is that d. firms advertise to differentiate their goods in monopolistic competition, potentially increasing the quantity sold and prices.
Step-by-step explanation:
The statement that best describes the role of advertising in a competitive industry is that firms in a competitive market advertise because they sell a differentiated good. In the context of monopolistic competition, advertising is crucial for differentiating a firm's products from those of competitors. It can either make the firm's perceived demand curve more inelastic (steeper), or it can cause an increase in demand for the firm's product (shifting the perceived demand curve to the right).
As a result, successful advertising could lead to higher quantities sold, higher prices, or both, ultimately increasing a firm's profits. On the contrary, in a perfectly competitive market, all goods are identical, and firms are price takers, so advertising would have minimal impact on sales and is less common. hence raising profits. In perfect competition, however, advertising is less impactful due to the homogeneous nature of products.