Critics of advertising argue that advertising by its very nature imposes a cost on society. Explain what these costs are
What will be an ideal response?
The argument is that large sums of money are spent to create minute, meaningless differences among products. Because of the money spent to create these differences the price of the product is increased. Advertising expenditures may also serve as a barrier to entry, as in the breakfast cereal industry.
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What is the nature of the elasticity of the demand curve faced by perfectly competitive firm?
a. Perfectly inelastic b. Perfectly elastic c. Unit elastic d. Highly elastic
If two investments are uncorrelated:
A. there is no benefit from diversification. B. there is no benefit to hedging. C. diversification reduces risk without changing the expected payoff. D. diversification reduces both risk and the expected payoff.