In a monopolistic competition market, what is the likely effect of advertising on long-run equilibrium?
1
Advertising shifts the demand curve outward and increases long-run economic profits.
2
Advertising reduces product differentiation, leading to lower profits in the long run.
3
Advertising increases average costs, pushing firms further from productive efficiency.
4
Advertising eliminates excess capacity by moving the firm to the minimum point of its average total cost curve.