If a Firm in a Monopolistically Competitive Market Successfully Uses

question 92

Multiple Choice

If a firm in a monopolistically competitive market successfully uses advertising to decrease elasticity of demand for its product,what will result

• A)The firm will be able to increase its markup over marginal cost.
• B)The firm will eventually have to lower price to remain competitive.
• C)The decreased elasticity of demand will increase the well-being of society.
• D)The decreased elasticity of demand will reduce average total cost.

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Definitions:

Courteous

Displaying politeness in one's attitude and behavior towards others; mannerly and respectful.

Lowball Technique

A persuasion tactic where an initially favorable offer is made, then terms are unfavorably changed, relying on commitment to secure agreement.

Highball Technique

A persuasive strategy where an initial, excessively high request is made, knowing it will likely be rejected, in order to make a subsequent, smaller request seem more reasonable.

Proposition

A statement or assertion that expresses a judgment or opinion.