How does advertising impact monopolistically competitive firms? Group of answer choices 1-It either causes a firm’s perceived demand curve to become more elastic, or advertising causes demand for the firm’s product to increase. 2-It causes a firm’s perceived demand curve to become more inelastic. 3-Advertising expenses drive down average cost of production by increasing demand for the product and in turn increases total revenue. 4-Advertising always causes monopolistically competitive firms to experience lower average costs.
How does advertising impact monopolistically competitive firms? Group of answer choices 1-It either causes a firm’s perceived demand curve to become more elastic, or advertising causes demand for the firm’s product to increase. 2-It causes a firm’s perceived demand curve to become more inelastic. 3-Advertising expenses drive down average cost of production by increasing demand for the product and in turn increases total revenue. 4-Advertising always causes monopolistically competitive firms to experience lower average costs.
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Monopolistic Competition
Section: Chapter Questions
Problem 4QCMC
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Question
How does advertising impact monopolistically competitive firms?
Group of answer choices
1-It either causes a firm’s perceived demand curve to become more elastic, or advertising causes demand for the firm’s product to increase.
2-It causes a firm’s perceived demand curve to become more inelastic.
3-Advertising expenses drive down average cost of production by increasing demand for the product and in turn increases total revenue.
4-Advertising always causes monopolistically competitive firms to experience lower average costs.
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