Q.What is Selling Cost ?
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Start your 14-day free trial to unlock the full solution →Selling cost is the money a firm spends on advertising and sales promotion to increase the demand for its product, and it is typical of monopolistic competition.
Selling cost is the expenditure incurred by a firm to promote the sale of its product and to attract or retain customers, rather than to physically produce the good. It includes spending on advertising, publicity, sales promotion schemes, salaries and commissions of salesmen, free samples, and window display.
The concept was highlighted by Chamberlin in the theory of monopolistic competition, where many firms sell differentiated (branded) products. Because products are close but not perfect substitutes, each firm spends on selling costs to shift its demand curve to the right and win customers away from rivals.
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