Question

In the framework of monopolistic competition, which of the following is not a possible outcome for a firm that runs a successful advertising campaign?

A. allocative efficiency
B. the ability of the firm to charge a higher price
C. the ability of the firm to sell a greater quantity
D. an increase in profits for the firm

Answer 1

Answer:

The correct answer is A)

Explanation:

When products and or services are manufactured at a level that maximizes social welfare, allocative efficiency is said to have occurred.

A market system characterized as monopolistic competition may never achieve productive efficiency because firms often fix prices at a point higher than their marginal costs.

Marginal cost refers to the added cost incurred by producing or manufacturing one additional unit of a product.

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