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AP Microeconomics/Unit 4: Imperfect Competition
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Brand Loyalty in Monopolistic Competition
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Assuming no changes in costs, what effect would an increase in brand loyalty have on a monopolistically competitive firm’s revenue?

A

Revenue and costs remain constant as brand loyalty impacts only consumer preferences not spending habits.

B

Revenue would remain constant but profits would decrease due to increased advertising costs.

C

Revenue would likely increase.

D

Revenue would likely decrease.

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