When a monopolistically competitive firm advertises,it is attempting to increase
A)The demand and decrease the price elasticity of demand for its product.
B)The demand and increase the price elasticity of demand for its product.
C)Long-run profits.
D)Market demand.

Question

Quizplus · Accepted Answer

Advertising in a monopolistically competitive market aims to differentiate the firm's product from its competitors, thereby increasing demand for its specific product and making consumers more loyal or less sensitive to price changes. This decreases the price elasticity of demand, as consumers are more willing to buy the product even if the price increases, due to brand loyalty or perceived uniqueness.

When a Monopolistically Competitive Firm Advertises,it Is Attempting to Increase