Q.Explain the meaning of Selling Cost with an example.

Selling cost is spending meant to create and increase demand (chiefly advertising and sales promotion), distinct from production cost, and is a special feature of monopolistic competition.

In the Tamil Nadu HSC Class-11 Economics syllabus, selling cost is explained as follows:

• Meaning: Selling cost is the expenditure incurred by a firm to promote the sale of its product — that is, to persuade buyers to purchase its brand rather than a rival's. The concept was developed by E.H. Chamberlin.
• Purpose: unlike production cost (which brings the good into existence), selling cost is meant to create, increase or maintain demand for the product.
• Forms: advertisement in newspapers, television, radio and the internet; free samples and gifts; discounts and sales promotion; salaries and commission of salesmen; window display and packaging.
• Where it arises: selling cost is most important under monopolistic competition, where products are differentiated and each firm advertises to distinguish its brand. Under perfect competition (homogeneous product) there is little need for selling cost. …