In the long run, advertising by all firms in a monopolistically competitive industry

Question

Quizplus · Accepted Answer

Advertising by all firms in a monopolistically competitive industry can create product differentiation, which might increase or decrease firms' prices depending on how consumers perceive the advertised products compared to those of competitors. It does not necessarily increase all firms' demand, decrease all firms' demand, lower all firms' prices, or lower all firms' costs.

In the Long Run, Advertising by All Firms in a Monopolistically