1. Class 11

2. Advertising Determinants of adv. Expenditure:
Disposible income
Unemployment
Government regulation
Informative and persuasive ads.
Launch product
İnformation provision
İncrease mkt. Share
Brand image

3. Monopolist
Monopolist would advertise until MC of advertising is equal to MR of advertising
Diminishing returns
Dorfman – Steiner condition:
Share of advertising= ratio of advertising elasticity of demand and price elasticity of demand
When advertising elasticity is high relative to price elasticity, it is efficient to advertise
When price elasticity is high relatie to advertising elasticity, it is efficient to cut price

4. Figure 13.1  Advertising and profit maximization in monopoly

5. Figure 13.2  Advertising, market structure and concentration