A monopolistic competitor will advertise to:

A) reduce excess capacity.
B) increase demand for its product.
C) collude more effectively with other firms.
D) produce on the upward-sloping portion of its ATC curve.

Excess Capacity

A situation where a firm is producing at a lower scale of output than it has been designed for.

Monopolistic Competitor

A firm operating in a market structure where many companies sell products that are similar but not identical, leading to competition based on product differentiation.

ATC Curve

Represents the average total cost of production at different levels of output, showing how cost per unit changes with scale.