« previous next »

Author Question: Explain why advertising is very important to a monopolistically competitive firm but not to a ... (Read 79 times)

danielfitts88

  • Hero Member
  • *****
  • Posts: 535
on: Jun 30, 2018
Explain why advertising is very important to a monopolistically competitive firm but not to a perfectly competitive firm or a monopolistic firm.

Question 2

Which of the following activities can create an external cost?
 a. Honking continuously while driving past a hospital.
  b. Reducing the use of plastic carry bags while shopping.
  c. Burying garbage under the soil and planting trees on it.
  d. Using smog controls on private cars.


pami445

  • Sr. Member
  • ****
  • Posts: 303
Reply #1 on: Jun 30, 2018
Answer to Question 1

A monopolistically competitive firm advertises in order to increase demand for its goods and make demand more inelastic. In contrast, a perfectly competitive firm sells a homogeneous good and can sell all it wants at the market price. As such, it has no reason to advertise at all. While a monopolistic firm could potentially increase demand for its good, advertising is generally not as important as a form of non-price competition because there are no other firms with which to compete in the industry.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Thyroid conditions may make getting pregnant impossible.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Polyploidy has been an important factor in the evolution of plants. Polyploidy has been an important factor in the evolution of plants.
Anatomically modern humans left archaeological clues, including evidence of burials, which indicate Anatomically modern humans left archaeological clues, including evidence of burials, which indicate
Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ... Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ...
Greet a First-Time Client With a Firm Handshake. Greet a First-Time Client With a Firm Handshake.
Firm handshake Firm handshake
Mechanisms of action of vitamin E, one of the most important lipid-soluble antioxidants Mechanisms of action of vitamin E, one of the most important lipid-soluble antioxidants
Video: Heart sounds

For a complete list of videos, visit our video library