If a Firm in a Monopolistically Competitive Market Uses Advertising

question 29

Multiple Choice

If a firm in a monopolistically competitive market uses advertising to lower the price elasticity of demand for its product,

• A) it will likely increase its price.
• B) it will likely lead to a monopoly, as other firms exit the market.
• C) it will increase the level of competition in the market.
• D) none of the above

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Definitions:

Skinner

An American psychologist best known for his work in behaviorism and the development of the theory of operant conditioning.

Response Deprivation Theory

The idea that when a contingency restricts access to an activity, it causes that activity to become a reinforcement.

Premack's Principle

A principle stating that more probable behaviors can serve as reinforcers for less probable behaviors.

High-Probability Activities

Activities that an individual is highly likely to engage in, often used in behavior modification by allowing access to them as a reward.