Question

Question 4 A monopolistically competitive firm chooses the quantity to produce where a. price equals marginal...

Question 4

  1. A monopolistically competitive firm chooses the quantity to produce where

    a.

    price equals marginal cost.

    b.

    demand equals marginal cost.

    c.

    marginal revenue equals marginal cost.

    d.

    Both a and c are correct.

Question 5

  1. Advertisements that appear to convey no information at all

    a.

    may convey information to consumers by providing them with a signal that firms are willing to spend significant amounts of money to advertise.

    b.

    are useless to firms but valuable to consumers for their entertainment quality alone.

    c.

    are usually associated with "infomercials."

    d.

    are useless to consumers but valuable to firms.

Question 6

  1. Advertising

    a.

    provides information about products, including prices and seller locations.

    b.

    has been proven to increase competition and reduce prices compared to markets without advertising.

    c.

    signals quality to consumers, because advertising is expensive.

    d.

    All of the above are correct.

Homework Answers

Answer #1

Ans 4)

Monopolistic competitive market is in the between Monopoly market and perfect competition in which in short term firms earn super normal profit by having Marginal Revenue equal to Marginal Cost but in the long run more firms do enter into the market and only normal profits are available in the long run where Price=ATC

hence option C is correct

An 5)
Most of the expensive advertisements which involves endorsements by actors may be scripted to be irrelevant as per the product to be advertise but higher the expense on advertise is the functional of good quality of product that is being advertised.

Hence only option validated this claim is option A

Option A is correct

ANs 6)

Option C is correct

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