Question

if a firm runs a successful advertising campaign, what happens to the firm's demand curve? choose one or more: a. the demand curve becomes flatter or less vertical. b. the demand curve shifts to the left. c. the demand curve becomes more vertical. d. the demand curve shifts to the right.

Answer 1

A successful advertising campaign can cause a firm's demand curve to shift to the right in monopolistic competition, increasing the demand for the firm's product. The correct answer is d. the demand curve shifts to the right.

Step-by-step explanation:

In the framework of monopolistic competition, a successful advertising campaign can cause the firm's perceived demand curve to shift to the right. This means that the demand for the firm's product increases. In other words, a successful advertising campaign can lead to an increase in the quantity demanded and potentially allow the firm to charge a higher price.

For example, if a firm launches a new advertising campaign promoting the benefits and features of their product, it can attract more customers and generate more demand. As a result, the firm's demand curve shifts to the right.

Therefore, the correct answer is d. the demand curve shifts to the right.