Monopolistic competitors advertise because
A) they have downward sloping demand curves.
B) the demand curves they face are very elastic.
C) they produce goods that can be differentiated from the goods of other firms in the industry.
D) they can earn long-run profits if they advertise.
Answer: C
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Which of the following most accurately describes the behavior of the U.S. economy during the 2001 recession?
A) Aggregate demand fell as business investment declined while aggregate supply rose as a result of continued productivity growth. B) Aggregate demand fell primarily as a result of reduced consumption while aggregate supply increased due to continued growth in productivity. C) Aggregate demand fell due to a reduction in business investment while aggregate supply declined due to a reduction in productivity. D) Aggregate demand fell due to the bursting of the housing bubble while aggregate supply fell due to slower productivity growth.
According to classical economists, when aggregate demand decreases
A) unemployment is reduced, the price level increases, and equilibrium real GDP is reached. B) unemployment is reduced, the price level decreases, and equilibrium real GDP is reached. C) unemployment temporarily increases, the price level increases, and equilibrium real GDP is reached. D) unemployment temporarily increases, the price level decreases, and equilibrium real GDP is reached.
If there is more production of final goods in the economy, then income ___.
A. will fall B. might fall C. will rise D. might rise
All are examples of government purchases that would be included in GDP except:
A. pencils for the employees of the FBI to use. B. the salaries of those in the military working in California. C. salaries paid by government to foreign contractors in Iraq. D. replacement calculators for the Congressional Budget Office.