Why would a firm in a monopolistically competitive industry advertise?
What will be an ideal response?
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.
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According to the income approach to measuring GDP, the largest income category is
A) profits. B) rent. C) wages. D) consumption expenditure. E) interest.
If the price is above the equilibrium price, then there is a
A) surplus, and market forces will operate to lower price. B) surplus, and market forces will operate to raise price. C) shortage, and market forces will operate to lower price. D) shortage, and market forces will operate to raise price.
If the interest rate increases from 6 percent to 10 percent per year, each $100 saved will earn
a. $4 per year more than before b. $6 per year more than before c. $10 per year more than before d. $16 per year more than before e. $60 per year more than before
Which of the following is the relationship among excess reserves, required reserves, and total reserves?
a. total reserves = required reserves - excess reserves b. excess reserves = total reserves/required reserves c. total reserves = excess reserves + required reserves d. total reserves = excess reserves - required reserves e. excess reserves = required reserves - total reserves