?

AP® Microeconomics

Free Version

Upgrade subject to access all content

Difficult

Advertising, Firm Demand, and Firm Costs

APMICR-JXOKYL

How will the demand and average variable cost (AVC) curves for an individual producer of a good be affected if ALL of the producers of similar goods start to engage in new advertising?

A

The firm’s demand curve will become more inelastic, and its AVC curve will shift downward.

B

The firm’s demand curve will become more elastic, and its AVC curve will shift upward.

C

The firm’s demand curve will remain unchanged, and its AVC curve will remain unchanged.

D

The firm’s demand curve will become more elastic, and its AVC curve will remain unchanged.

E

The firm’s demand curve will become more inelastic, and its AVC curve will shift upward.