This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Why would a firm in a monopolistically competitive industry ever advertise? What will be an ideal ... (Read 53 times)

mckennatimberlake

  • Hero Member
  • *****
  • Posts: 559
on: Jun 29, 2018
Why would a firm in a monopolistically competitive industry ever advertise?
 
  What will be an ideal response?

Question 2

People buy insurance do protect themselves from moral hazard. True or false? Explain.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

amynguyen1221

  • Sr. Member
  • ****
  • Posts: 355
Reply #1 on: Jun 29, 2018
Answer to Question 1

Similar to virtually every other business decision, advertising carries with it benefits and costs. While advertising causes the fixed costs to increase, and thereby shifts the average total cost curve upward, advertising also might increase the demand for the company's product by temporarily making people believe that the product is better than some other firm's product. Firms in monopolistic competition frequently advertise extensively in order to differentiate their product from those of their competitors and thereby increase the demand for their particular version of the product.

Answer to Question 2

The statement is false. In fact, insurance creates a moral hazard problem because a person with insurance coverage for a loss has less incentive than an uninsured person to avoid such a loss. For example, a person with fire insurance for his house has less incentive to take precautions against fire than a person with no fire insurance does.


mckennatimberlake

  • Member
  • Posts: 559
Reply 2 on: Jun 29, 2018
:D TYSM

milbourne11

  • Member
  • Posts: 322
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

More than 20 million Americans cite use of marijuana within the past 30 days, according to the National Survey on Drug Use and Health (NSDUH). More than 8 million admit to using it almost every day.

Did you know?

When intravenous medications are involved in adverse drug events, their harmful effects may occur more rapidly, and be more severe than errors with oral medications. This is due to the direct administration into the bloodstream.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

The Acheulean industry is typified by hand axes and cleavers. The Acheulean industry is typified by hand axes and cleavers.
John Lewis Krimmel’s painting of the Fourth of July in Centre Square Philadelphia (1812) shows the d John Lewis Krimmel’s painting of the Fourth of July in Centre Square Philadelphia (1812) shows the d
The Number of Children Americans Think Are Ideal The Number of Children Americans Think Are Ideal
Competitive enzyme immunoassay. (a) Shows the uninhibited reaction and (b) shows the inhibited ... Competitive enzyme immunoassay. (a) Shows the uninhibited reaction and (b) shows the inhibited ...
Natural Resources and Industry Natural Resources and Industry
Kyoto Protocol encourages industry to innovate and reduce the level of emissions Kyoto Protocol encourages industry to innovate and reduce the level of emissions
Video: Properties of macromolecules (Explained with No Audio)

For a complete list of videos, visit our video library