Discuss the role of product differentiation and advertising in monopolistic competition
What will be an ideal response?
Firms acquire market power through product differentiation, distinguishing their products from similar products offered by competitors. Product differentiation promotes market power by convincing consumers that a particular firm's product is superior to the products offered by its rivals. One way to create differentiation is through advertising. Successful advertising increases demand for a firm's product and makes its demand more inelastic. Although advertising increases costs, if the increase in revenue from sales generated by advertising exceeds the cost, the firm's profit will increase.
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Is it possible for a super-entrepreneur to solve all of the coordination failure problems within a developing economy? Discuss
What will be an ideal response?
Carl's Computer Center sells computers to business firms. Businesses then use the computers to produce other goods and services. Over the past year,
sales representatives were paid $3.5 million, $0.5 million went for rent on the building, $0.5 million went for taxes, $0.5 million was profit for Carl, and $10 million was paid for computers at the wholesale level. What was the firm's total contribution to GDP?
"Fiscal Policy" is the federal government's plan for
a. international trade, designed to balance exports and imports. b. spending and taxes, designed to influence the level of aggregate demand. c. manipulating the money supply and the control of interest rates. d. All of the above are correct.
Suppose that the U.S. imposes a countervailing duty of 10% on coated paper imported from China to offset alleged Chinese subsidies. Suppose further that the U.S. duty-free price of Chinese coated paper imports is $500 per 1,000 meter roll and that the price of an equivalent roll of U.S.made coated paper is $600 per 1,000 meter roll. What is the U.S. government's estimate of the dollar value of the Chinese subsidies?
a. $50 per 1,000 meter roll b. $60 per 1,000 meter roll c. $50 to $60 per 1,000 meter roll d. $100 per 1,000 meter roll