Explain why advertising that results in spuriously differentiated products may result in a deadweight loss to total welfare
What will be an ideal response?
The firm spends money to steal customers from a rival. This additional expense only results in a transfer from one producer to another. The firm that advertises gains, the rival loses and the advertising expense can be thought of as part of deadweight loss. The advertising expense does nothing productive from a social point of view.
Economics
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Movement along the aggregate expenditure line is caused by a change in the level of income
a. True b. False Indicate whether the statement is true or false
Economics
A requirement that the budget be balanced each and every year would prevent automatic stabilizers from working and would __________________ the severity of economic fluctuations.
a. worsen b. lessen c. prolong d. improve
Economics