Which is a reason why there is no advertising by Individual firms under pure competition? Multiple Choice Firms produce a homogeneous product. Firms do not make long-run profits. The market demand curve cannot be increased. The quantity of the product demanded is very large.
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- Answer the given question with a proper explanation and step-by-step solution. Which of the following characterizes the market that Starbucks competes in? All coffeehouses face horizontal demand curves. Coffeehouses sell identical products. Barriers to entry are low. There are a small number of firms.If profits depend on both how much is produced (output) and on the level of advertising, then a profit-maximizing firm should choose the levels of output and advertising at which: a. the marginal revenue of output equals the marginal cost of output. b. the addition to total revenue of the last unit of advertising equals the addition to total cost of the last unit of advertising. c. total revenue equals total cost for both output and advertising d.both a and b e. both b and cIf it weren't for the _____ assumption of perfect competition, each firm would be able to advertise the differentiating characteristics of its product to entice consumers. Question 1 options: many small producers allocative efficiency free entry and exit homogenous product asymmetric information
- To maximize economic profit, a competitive firm will produce a quantity where Group of answer choices marginal revenue = marginal cost. price = average cost. marginal revenue = average variable cost. average revenue = average total cost.If new firms are able to enter the furniture market, then, Ceteris Paribus, other things being equal: Group of answer choices some established firms must exit the industry. the demand curve shifts to the left. the supply curve shifts to the right. the supply curve shifts to the left.Limiting Market Power: Regulation and Anti-Trust Predatory pricing threatens to keep competitors out of the market. It is a price that is so low that it will be profitable for the firm that adopts it only if a rival is driven out of the market. Debate why predatory pricing is an economic inefficiency in a perfectly competitive.
- Your family owns a small sandwich shop called Healthy Hearty Sandwich that mainly caters to local residents in Glendale. As of late, your parents are concerned that business has been slow due to the economic downturn. Your father suggests that you increase the price of sandwiches so you can earn more profit for every sandwich you sell, but your mom is worried that this is going to lose too many customers. She reminds the family that last time you raised the price by 10%, half the people went to your competitors’ store My Sandwich Is Better Than Yours. Your sister wonders if there is anything that can be done to attract more customers other than through a price cut. Your brother remembers that you are currently taking microeconomics and asks if you can share some insight to what the family can do. What economic wisdom will you share with your family? Keep in mind that no one in the family has formally taken an economics class before, which means you should try to avoid too much economic…In competitive market structure, firms earn zero economic profit in the long run but still remain in the market. Firms facing loss in short run may continue to produce in a competitive market structure. Price discrimination is beneficial for the society in general but it is difficult to practice in real world. Monopolistically competitive firms are producing efficiently because P=MC in the long-run. 5. Advertising helps raise revenue for the firms and provides information to the customers; therefore, expenditures on advertising are justified.Discuss to what extent you agree with the following statements. Advertising helps raise revenue for the firms and provides information to the customers; therefore, expenditures on advertising are justified.
- Your company operates in a perfectly competitive market. One of your business partners recommends creating an aggressive advertising campaign for your product in order to boost sales. What is wrong with this reasoning?A potential negative effect of advertising for society is that it can Multiple Choice be the major cause of price wars among firms in the industry. reduce mutual interdependence and increase competition. be self-canceling and contribute to economic inefficiency. lower barriers to entry and undermine profits in the industry.Airline is a monopolistically competitive market with different name brands such as United Airline, JetBlue, Virgin Airline, etc. A law that restricts the ability of airlines to advertise on billboards in Las Vegas, a resort destination, would likely lead to increased price competition among airline business in Las Vegas. reduced efficiency of Las Vegas airline markets. consumers requesting an increase in the number of billboards in Las Vegas. no change in profits for all airline businesses in Las Vegas.