Question

Explain any two disadvantages of advertising.

Answer 1

1. Higher Prices: Advertising increases prices of products to consumers because the expenses incurred on advertisements are passed on to consumers. However, advertising may not increase prices if it leads to large scale production.
2. Creation of Monopoly: Big firms spend huge amounts of money on advertising. Small firms cannot compete with them and ultimately fail. As a result, big firms become monopolies and use their monopoly power to exploit consumers.