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Author Question: Suppose a valley periodically floods. A dam can be built in the river that would prevent the ... (Read 114 times)

neverstopbelieb

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Suppose a valley periodically floods. A dam can be built in the river that would prevent the flooding. Explain how flood control provided by building the dam arguably fits the characteristics of a public good.
 
  What will be an ideal response?

Question 2

Why do firms in a monopolistically competitive industry advertise?
 
  What will be an ideal response?



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Melissahxx

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Answer to Question 1

The dam would be indivisible since it must be a certain size in order to be effective. Once flood control is provided, new homes can be protected at no additional cost. Any one home's protection does not reduce the protection from flooding for any other home. It would be impossible to exclude someone from the benefits of the flood control, so flood control arguably is a public good.

Answer to Question 2

In a monopolistically competitive industry, products sold by firms are differentiated or at least perceived to be different by consumers. Other things being equal, product differentiation can result in more profits. Firms can therefore increase their monopoly power and thus profits by differentiating their own products from those of other firms.




neverstopbelieb

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it


softEldritch

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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