Multiple choice

A firm under monopolistic competition advertises

  1. to compete successfully with the rival firms

  2. to lower cost of production

  3. to increase sales and profit

  4. because it cannot raise price
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 A monopolistic firm do not have any rivals, therefore firm can raise prices, no such issues. Advertising is done for increasing sales and profit. 

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