Question

What did the economist A.C. Pigou think the relationship was between advertising and monopolistic competition? A.C. Pigou thought that advertising by monopolistically competitive firms will have a slightly positive net effect in the market. A.C. Pigou thought that advertising by monopolistically competitive firms will have a net positive effect in the market. A.C. Pigou thought that advertising by monopolistically competitive firms will have a net negative effect in the market. A.C. Pigou thought that advertising by monopolistically competitive firms will not have any net effect in the market

Answer 1

The correct answer is letter "D": A.C. Pigou thought that advertising by monopolistically competitive firms will not have any net effect in the market.

Step-by-step explanation:

English economists Arthur Cecil Pigou (1877-1959) in his book "The Economics of Welfare" (1920) where he stated expenses on advertisement by firms in monopolistic competition neutralize one another as if the advertisement had never been promoted. This is because products under those market schemes are so different one from another that advertising itself does not generate a big impact on consumer patterns.

Pigou is also known for his work on the welfare economy, business cycles, and unemployment.