Re:Why ads are a problem
by manigandham on Monday December 21, 2015 @12:38AM
(#10769748)
Exactly. Advertising usually leads to more volume and availability which has a much greater effect in actually reducing the price of goods.
The cost of marketing (which includes advertising) is usually a small fraction of the overall cost of production for most products and services.
Costs affect prices because if companies can't make a profit, they stop doing business. Under (near perfect) competition, prices tend to be a bit over cost. Supply and demand may be the mechanism, but costs do indeed come into it.
In many cases though, advertising lowers prices because if you can sell more products, the average cost can be lower because of economies of scale.