Do firms in perfect competition advertise their products? Why or why not?
What will be an ideal response?
Firms in perfect competition do not advertise their product. The purpose of advertising is to increase the demand for the firm's product by convincing consumers that it's better than that of competitors. Perfectly competitive firms sell a standard product, so consumers won't believe that, for example, wheat sold by Farm A is somehow better than wheat sold by Farm B. So if a perfectly competitive firm advertised, this would only increase its costs, with no effect on demand and price.
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In general, the supply curve for a natural resource
A) slopes upward. B) slopes downward to reflect decreasing available quantities over time. C) is horizontal. D) is vertical.
A true cost-of-living adjustment (COLA) in response to a change in prices would compensate consumers so that they would be able to
A) purchase the same bundle they purchased before prices changed. B) achieve the same level of utility they did before prices changed. C) face the same choices they did before prices changed. D) achieve an increase in utility that is equal to the rate of inflation.
All of the following were important colonial industries except:
a. tobacco production. b. production of ships' stores. c. manufacturing of finished metal products. d. shipbuilding.
Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
a. with rent control, the government guarantees landlords a minimum level of profit. b. they become resigned to the fact that many of their apartments are going to be vacant at any given time. c. with shortages and waiting lists, they have no incentive to maintain and improve their property. d. with rent control, it becomes the government's responsibility to maintain rental housing.