Why would a firm in a monopolistically competitive industry ever advertise?
What will be an ideal response?
Similar to virtually every other business decision, advertising carries with it benefits and costs. While advertising causes the fixed costs to increase, and thereby shifts the average total cost curve upward, advertising also might increase the demand for the company's product by temporarily making people believe that the product is better than some other firm's product. Firms in monopolistic competition frequently advertise extensively in order to differentiate their product from those of their competitors and thereby increase the demand for their particular version of the product.
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Stagflation occurs when
A) inflation rises and GDP rises. B) inflation falls and GDP rises. C) inflation rises and GDP falls. D) inflation falls and GDP falls.
The purpose of fiscal policy is to
A. alter the direction of the economy. B. change people's attitudes toward government. C. offer insight into the way things work. D. educate people as to the importance of economics.