Under Oligopoly, If One Firm in an Industry Significantly Increases

question 137

Multiple Choice

Under oligopoly, if one firm in an industry significantly increases advertising expenditures in order to capture a greater market share, it is most likely that other firms in that industry will

• A)pursue a strategy to reduce advertising expenditures to maintain profits.
• B)decide to increase advertising expenditures even if it means a reduction in profits.
• C)make no changes in advertising expenditures because advertising is effective in the short run, but not the long run.
• D)increase the price of the product to improve profits and then increase advertising expenditures.

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