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How Monopolistic Competitive Firms can Increase Demand
Other than advertising, monopolistic competitive firms need to increase the demand for their products by attracting more customers. One of the main ways that monopolistic firms can do this is by lowering prices. Fundamentally, consumers will demand more products at lower prices than the same at higher prices.
According to Arnold (2013), monopolistic firms have significant influence in setting the price for their prices. Therefore, they can increase demand for their products by reducing the product prices, thereby selling more and making more profits.
Secondly, they can do this by improving the quality of their products by maintaining the highest level of production standards. This way, consumers will demand more of their products at the prevailing prices. In addition, monopolistic competition firms can offer customers after sale services in order to keep the existing customers, and attract new customers. This way, monopolistic competition firms can increase the demand for their products.
References
Arnold, R. (2013). Principles of Micro-Economics-7th Edition. Stanford. Cengage Learning