Question

In monopolistic competition, if a firm advertises and effectively raises consumer awareness of its product, it tends toA) lower costs and increase demand for its product.B) raise costs and increase demand for its product.C) raise costs and decrease demand for its product.D) lower costs and decrease demand for its product.

Answer 1

Answer:

B) raise costs and increase demand for its product

Explanation:

A monopolistic competition is when there are many firms operating in an industry. The firms sell differentiated goods and set the market price for their goods and services.

Monopolistic competition engage in advertisement to increase the awareness for their goods.

If advertising is successful , it increases the demand for their goods and services.

Advertising also increases the cost of production.

I hope my answer helps you.