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AP® Microeconomics

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Erica's Non-Price Enigma

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Erica owns a firm in a monopolistically competitive industry. In order to stay ahead of her rivals, Erica is encouraged by her Economics-student advisor to engage in activities that constitute non-price competition.

These activities can best be described as:

A

advertising, product promotion, and changes in the characteristics of Erica’s product

B

specific competition between Erica’s firm and another firm in the industry

C

Erica’s price increases that are ignored by her rivals

D

increases in Erica’s production costs that are not reflected in price increases.

E

reductions in Erica’s production costs that are not reflected in price reductions.