Which of the Following Statements Is True About Advertising by a Monopolistically

question 72

Multiple Choice

Which of the following statements is true about advertising by a monopolistically competitive firm?

• A)Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products.
• B)Advertising could make the monopolistic competitor's demand more inelastic, but advertising has no effect on a perfect competitor's demand.
• C)Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm's product.
• D)Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry.

---

Definitions:

Outstanding Balance

The total amount of money owed on a loan, credit card, or mortgage that is yet to be paid.

Invoice

A document issued by a seller to a buyer, specifying the items or services sold, prices, terms of sale, and payment instructions.

Payment

The act of providing money in exchange for goods, services, or to satisfy a debt.

Credited

Recognized or accounted for in financial transactions; often involves adding a sum to an account balance.