1.Which advertising scenario is likely to provide the least amount of economic u
ID: 2496237 • Letter: 1
Question
1.Which advertising scenario is likely to provide the least amount of economic usefulness?
A) NFL player Peyton Manning is shown throwing a football in a toothpaste commercial.
B) An online advertisement is posted at Cars.com for a “2005 Volvo S60 with 60,000 miles, a sunroof, and heated leather seats.”
C) A radio commercial for a local restaurant is announcing special prices during any college football broadcast.
2. As the number of firms in an oligopoly increases:
A) each firm has less of an incentive to behave cooperatively.
B) it is more likely that firms will collude successfully.
C) it indicates that barriers to entry are high.
D) it becomes easier for firms to agree to restrict output.
3.If a firm operating within monopolistic competition is producing a quantity that generates MC > MR, then the marginal decision rule tells us that profit:
A) can be increased by increasing production.
B) can be increased by decreasing production.
C) can be increased by decreasing the price.
D) is maximized only if MC = P.
4. (Figure: Payoff Matrix II for Blue Spring and Purple Rain)
Examine the figure Payoff Matrix II for Blue Spring and Purple Rain. The figure refers to two producers of bottled water. Suppose Blue Spring charges a high price and Purple Rain does the same. In the next period, Blue Spring charges a low price and Purple Rain earns a loss. If Purple Rain responds with a tit-for-tat strategy, they will:
A) always charge a low price—the same as its dominant strategy.
B) make random changes in its price so that Blue Spring is left with no systematic strategy.
C) charge a low price in the next period and thereafter charge the same price that Blue Spring charged in the previous period.
D) always charge a high price.
Explanation / Answer
A) NFL player Peyton Manning is shown throwing a football in a toothpaste commercial.
This will increase the cost to company.
2. As the number of firms in an oligopoly increases: it is more likely that firms will collude successfully. As they will make more profit after collusion.
3. If a firm operating within monopolistic competition is producing a quantity that generates MC > MR, then the marginal decision rule tells us that profit: can be increased by increasing production. As this will reduce the cost.
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