Under oligopoly, if one firm in an industry significantly increases advertising expenditures in order to capture a greater market share, it is most likely that other firms in that industry will:
A. increase the price of the product to improve profits and then increase advertising expenditures.
B. decide to increase advertising expenditures even if it means a reduction in profits.
C. pursue a strategy to reduce advertising expenditures to maintain profits.
D. make no changes in advertising expenditures because advertising is effective in the short run, but not the long run.
Answer: B
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All of the following are examples of the volunteer's dilemma except which one?
A) You are trying to decide whether to spend time volunteering at a local homeless shelter or at a neighborhood elementary school. B) You, along with a dozen other drivers, witness a car accident. You cannot decide whether to dial 911 or let one of the other witnesses dial 911 instead. C) Five high school students are contemplating sneaking out of school after lunch. One student has to create a diversion that will get him sent to detention in order for the others to escape unseen. D) A house is on fire and there may be someone still inside. Who will go inside the burning house to attempt to rescue the potential victim?
Gross domestic product (GDP) is a poor measure of social well-being because:
a. the value of leisure time is included in GDP accounting. b. the revenue earned through exports is ignored c. each dollar of government spending is valued at less than one-half of private spending. d. consumer spending is more important than business spending and should be considered more valuable. e. it values products at their market prices but ignores services produced.
Which of the following is false? a. Market prices signal the relative availability of products to buyers
b. Market prices signal the relative value consumers place on products to sellers. c. The information and incentives offered by market price adjustments provide the "invisible hand" toward socially desirable cooperation between consumers and producers. d. None of the above are false; all are true.
Julia knows the price elasticity of movie rentals is 3 . She knows, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately
a. 150 percent. b. 100 percent. c. 75 percent. d. 33 percent.