Final answer:
Strategies such as price adjustments, product differentiation, cost reduction, and increased advertising are employed by firms to modify the market and increase demand for their products. Notably, in monopolistic competition, effective advertising can shift the demand curve rightward, enabling firms to sell more or at higher prices, thus increasing profits. The correct answers are a) Price adjustments b) Product differentiation c) Cost reduction d) Increased advertising.
Step-by-step explanation:
The strategies to modify the market include price adjustments, product differentiation, cost reduction, and increased advertising. In the framework of monopolistic competition, firms can increase demand for their products by employing these strategies. Price adjustments can make products more appealing by positioning them as more affordable or premium. Product differentiation involves making changes or enhancements to set a company's offerings apart from competitors. Cost reduction strategies can improve efficiencies and lower production costs, allowing competitive pricing. Finally, increased advertising aims to change consumer perceptions, making a product's demand curve shift to the right – indicating increased demand – or become more inelastic – showing that consumers are less sensitive to price changes.
Specifically, advertising is crucial in monopolistic competition as it makes consumers aware of the differences between products, leading to increased demand or the ability to charge higher prices. A successful advertising campaign can result in a firm's ability to sell greater quantities or at higher prices, thereby increasing profits. In contrast, other strategies like product differentiation without direct advertising can also enhance consumer interest and stimulate demand.