Introduction
Advertising is an essential part of market management and it greatly influences the demand of products. This essay focuses on how advertising will change price elasticity of demand and the reason for that. Beyond which, the essay will discuss and compare social welfare in competitive market and monopolistically competitive market.

There are many reasons why firms advertise. For example, they want to make their brand well-known. The real purpose of this behavior, however, is to sell as many products as possible at a high price to make profit. So one influence of a successful advertisement is to shift demand curve to the right(from D to D1) and vice versa.

However, after advertising for a certain product, the cost of producing products will increase. According to the demand curve, as price increasing, demand will decrease, which is the reason firms are trying to figure out whether setting a higher price and the related lower demand will lead to profit loss. If a product has an elastic demand, an increase in price will lead to a loss in total revenue. On the contrary, if the product has an inelastic demand, an increase in price will lead to a gain in total revenue. A successful promotion advertisement should be able to make the product less price elastic, and vice versa (BAJADA, 2006).
Mainly, advertising can change price elasticity of demand in two ways. First, substitute. One aim of advertising is to convince consumers that the produce is unique and reduce consumers’ choice. By doing this, when consumers go shopping, they will focus on particular products. Under this strategy，Some advertiser tend to focus on the unique functions in their advertisement, aiming to attract consumer who are willing to pay for those features—longer battery life, large screen, or warranty for replacement. Others prefer telling consumers that their product is the best choice