The main criticism by economists about advertising is that O advertising will le
ID: 1117887 • Letter: T
Question
The main criticism by economists about advertising is that O advertising will lead to lower quality products O the expense of ads will raise average total cost O advertising will mislead consumers Question 21 5 pts If each of two competing monopolists undertakes equally successful advertising efforts to attract consumers away from the other, the total result is O they will both improve their industrial position O they will both increase market share O they will simply neutralize one another's efforts D Question 22 5 pts In what way(s) is a monopolistically competitive firm inefficient? lt produces at the minimum of its average cost curve. O It produces where marginal revenue is equal to marginal cost. O It charges a price higher than marginal cost.Explanation / Answer
20.
The main criticism of the economist about advertising is that expense of advertisement will increase the total cost of the firm, therefore the ATC.
Hence option second it the correct answer.
Option second; the expense of advertisement will increase ATC.
22.
If two competing monopolist is equally successful advertising effort to attract consumers away from the others, then the total effect will be that the action of both the monopolist neutralizes one's another effort.
This is because they reduce the market share of each other by the almost the same amount of quantity.
Hence option third is the correct answer.
22.
The monopolistically competitive firm is inefficient because in this market firm charge price greater than the MC.
On the other hand, efficient firm charges; price=MC
Hence option third is the correct answer.
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