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Author Question: What arguments can be made against product differentiation and advertising? What will be an ideal ... (Read 226 times)

debasdf

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on: Jun 29, 2018
What arguments can be made against product differentiation and advertising?
 
  What will be an ideal response?

Question 2

If a lower exchange rate spurs exports then why wouldn't it be a good idea of policymakers to intervene to push the exchange rate as low as they can?
 
  What will be an ideal response?


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Anton

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Product differentiation and advertising lead to a waste of society's resources. The product of one firm is so close to the product of a competitor. Is it really necessary? Also, advertising may serve as a barrier to entry. It may be costly for a new firm to gain brand recognition.

Answer to Question 2

If a lower exchange rate were the key to growing exports then policymakers could simply push the exchange rate so low that the currency becomes worthless. In this case if would be difficult to see why anyone would continue to accept this nation's currency for payment of goods. Eventually this policy would have the opposite effect and exports would decline. At the same time the lower value of the currency would require consumers to pay even more for imported goods.


debasdf

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Reply #2 on: Jun 29, 2018
Correct answers!


Anton

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Reply #3 on: Jun 29, 2018
Great! Please up vote :D


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