Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit...

Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must: Multiple Choice increase the value of its product. increase its advertising. lower its quality. lower its price.

Expert Solution

A monopolistic firm is a maker and profit-maximizing condition is

MR=MC

A Monopolistically competitive firm

Since a monopolistic firm is that form of market in which there is large number of buyers and sellers and firm sells differentiated product based on quality, size, shape etc, therefore product is not homogeneous. Since firm is price maker but firm does not compete on the price but they compete in the market based on size, quantity quality etc.

Since the example of imperfectly competitive firms are monopolistic competitive firm and the demand curve of imperfectly competitive market are downward sloping. Hence for selling an extra unit of output, the imperfectly competitive firm advertise for their product and not change the price because in this market there is non-price competition among firms.

Therefore given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must increase its advertising.

Hence option second is the correct answer.

Second; increase its advertising

Rahul Sunny answered 1 year ago

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