« previous next »

Author Question: Why would a firm in a monopolistically competitive industry advertise? What will be an ideal ... (Read 46 times)

pragya sharda

  • Hero Member
  • *****
  • Posts: 566
on: Jun 29, 2018
Why would a firm in a monopolistically competitive industry advertise?
 
  What will be an ideal response?

Question 2

The basic reason that a competitive unregulated market produces an inefficient amount of a good with an external cost is because
 
  A) producers cannot measure marginal social cost.
  B) producers do not pay the external cost.
  C) the general public does not care about external costs.
  D) external costs are not a political issue.
  E) the external cost is paid by consumers rather than producers.
Foundations of Microeconomics ¦ Bade, Parkin ¦ 8th Edition
Buy Test-Bank


Beatricemm

  • Sr. Member
  • ****
  • Posts: 323
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

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

pragya sharda

  • Hero Member
  • *****
  • Posts: 566
Reply #2 on: Jun 29, 2018
Thank you


Beatricemm

  • Sr. Member
  • ****
  • Posts: 323
Reply #3 on: Jun 29, 2018
No problemo


« previous next »
 

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

The immune system needs 9.5 hours of sleep in total darkness to recharge completely.

Rebound Tenderness, Apply Firm Pressure to the Abdomen Rebound Tenderness, Apply Firm Pressure to the Abdomen
The Acheulean industry is typified by hand axes and cleavers. The Acheulean industry is typified by hand axes and cleavers.
The Number of Children Americans Think Are Ideal The Number of Children Americans Think Are Ideal
One-handed kneading. Tissues are lifted with the whole hand in firm contact. One-handed kneading. Tissues are lifted with the whole hand in firm contact.
Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ... Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ...
Effects of competitive inhibition on enzyme kinetics Effects of competitive inhibition on enzyme kinetics
Video: Major Elements in Biological Molecules: Lipids

For a complete list of videos, visit our video library