Identify and explain three pros and three cons for advertising.
What will be an ideal response?
The pros and cons will vary, but should all be accurate and show a thorough understanding of positive and negative aspects of advertising. A sample answer follows: Critics assert that firms waste billions of dollars on advertising for trivial products. Also, advertising can convince people to buy something they didn’t know existed, thereby creating a desire in consumers. This is called the demonstration effect. Finally, ads often mislead, making claims that are not fulfilled when consumers buy the products. However, supporters claim advertising gives people choice and enables them to express themselves in various ways. Also, ads provide important information such as product availability and store hours. Finally, ads reduce the market power of firms by showing consumers all the firms in the market and the various prices they charge.
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If the government removes a tax on suppliers, then this will cause the ________ schedule to shift ________.
A. demand, right B. demand, left C. supply, right D. supply, left
Under conditions of perfect competition, if a profitable firm pushes its output beyond the point where MR equals MC,
a. profits increase. b. profits diminish. c. AFC increases. d. AVC decreases.
Which of the following statements is most accurate about advanced economies?
A. Economies experience a positive growth trend over the short run but experience significant variability in the long run. B. Economies experience a positive growth trend over the long run but experience significant variability in the short run. C. Economies experience positive and stable growth over both the long run and short run. D. Economies experience little long-run growth in output but can experience significant growth in the short run.
Perfectly competitive firms are price setters.
Answer the following statement true (T) or false (F)