A. Advertising manipulates people’s tastes to create a desire that otherwise would not exist
B. Advertising increase competition Which causes unnecessary bankruptcies and layoffs.
C. Advertising increases brand loyalty causes demand to be more inelastic and thus, increase mark-up over marginal cost.
All of these answers are criticisms of advertising and brand names
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Which of the following firms is most likely to spend a large percentage of their revenue on advertising ?
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The use of word “competition” in the name of the market structure called “monopolistic competition” refers to the fact that ?
A. the producer of a highly differentiated consumer product
B. the manufacturer of an undifferentiated consumer commodity
C. a perfect competitor
D. The manufacturer of an industrial product
E. The producer of a low-quality product that costs the same to produce as a similar high-quality product
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One source of inefficiency in monopolistic competition is that since price is above marginal cost, some units are not produced that buyers value in ?
A. there are many sellers in a monopolistically competitive market and there is free entry and exit in the market just like a competitive market
B. Monopolistically competitive firms face a downward-sloping demand curve just like competitive firms.
C. Monopolistically competitive firms charge prices equal to the minimum of their average total cost just like competitive firms.
D. The products are differentiated in a monopolistically competitive market just like in a competitive market.
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Which of the following firms has the least incentive to advertise ?
A. Since price is above marginal cost surplus is redistributed from buyers to sellers
B. monopolistically competitive firms earn economic profits in the long run
C. monopolistically competitive firms produce beyond their efficient scale
D. excess of the cost of production and this causes a deadweight loss.
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In the short run, if the price is above average total cost in a monopolistically competitive market, the firm makes ?
A. a manual fracture of breakfast cereal
B. a wholesaler of crude oil
C. a restaurant
D. a manufacturer of home heating and air conditioning
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Which of the following products is least likely to be sold in a monopolistically competitive market ?
A. losses and firms exit the market
B. profits and firms exit the market
C. losses and firms enter the market
D. profits and firms enter the market
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Which of the following is not an argument put forth by economists in support of the use of advertising ?
A. breakfast
B. cotton
C. video games
D. beer
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Defenders of the use of brand names argue that brand names ?
A. Advertising increases competition
B. Advertising provides information to customers about prices, new products and location of retail outlets.
C. Advertising provides a creative outlet for artists and writers
D. Advertising provides new firms with the means to attract customers from existing firms.
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The use of the word “monopoly” in the name of the market structure called “monopolistic competition” refers to the fact that ?
A. all of these answers
B. are useful even in socialist economics such as the former Soviet Union
C. provide information about the quality of the product
give firms incentive to maintain high quality
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A. monopolistically competitive firms charge prices equal to their marginal costs just like monopolists
B. a monopolistically competitive firms faces a downward-sloping demand curve for its differentiated product and so does a monopolist
C. monopolistically competitive markets have free entry and exit just like a monopolistic market
D. monopolistically competitive firms produce beyond their efficient scale and so do monopolists