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Which of the statements is true regarding advertising? Perfectly competitive firms have the strongest incentive to advertise. Advertising is only potentially effective if a firm has some market power. Advertising increases economic efficiency. All of the statements are true regarding advertisements.

Answer :

Answer:

The correct statement about the advertisement is that, it is the only potential as well as effective toll if the firm or business has the market power.

Explanation:

Advertising is the term which is stated as the medium by which the firm informs the potential customers or clients about the goods and services, arouse interest as well as induce the buyers to buy the product.

It helps in differentiate the products and also build the brand. So, in case the firm does not have the market power, then the firm would not have the no control over the quantity and the price of the product, which lead to ineffective advertising.

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