99.1k views
4 votes
Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as

1 Answer

4 votes

Answer: the marginal benefit of advertising exceeds the marginal cost of advertising

Explanation: Under a monopolistic competition, there are fewer sellers in the market, and due to the fact that a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as the marginal benefit of advertising exceeds the marginal cost of advertising allowing the monopolist to turn a profit for the business while keeping it relevant for as long as is possible.

User Zkunov
by
5.7k points