solution

There are at least three reasons the statement is false. First, price may be above average cost in the absence of advertising, and equal to average cost when advertising increases competition. Second, the firm may operate at a lower point on the higher average cost curve as a result of advertising. Even though advertising results in the firm operating on AC′ rather than AC, the firm may be at point B with advertising and point A without advertising (because advertising leads to more elastic demand curves). Third, even if the money price of the product does rise as a result of advertising, the full price may still be lower