In: Economics
In a perfectly competitive market, a firm should advertise to where ["the extra revenue from an additional dollar spent on advertising just equals the marginal cost of producing one more unit of the good.", "such that they can begin charging the same prices to all consumers but selling them different quantities.", "they should not advertise at all", "the additional revenue generated by one more dollar of advertising just equals the extra dollar cost of advertising."]
In a monopolized market, a firm should advertise to the point at which ["the extra revenue from an additional dollar spent on advertising just equals the marginal cost of producing one more unit of the good.", "they should not advertise at all", "the additional revenue generated by one more dollar of advertising just equals the extra dollar cost of advertising."]
In a monopolistically competitive market, a firm should advertise to the point at which ["they should not advertise at all", "the additional revenue generated by one more dollar of advertising just equals the extra dollar cost of advertising.", "the extra revenue from an additional dollar spent on advertising just equals the marginal cost of producing one more unit of the good."]
Two common problem that insurers must deal with are ["irrationality", "cost calculations", "asymmetric information", "moral hazards"] , which means that the insured may alter his behavior once approved for insurance, and the even bigger problem of ["costly endeavors", "Moral Hazards", "post existing conditions", "asymmetric information"] , meaning that the potential insured may hide crucial information for his insurability. The 2nd of these was dealt with by the ACA, also known as Obamacare,by way of eliminating the ability to deny due to pre existing conditions and is the biggest problem with the ACA and will potentially (many say absolutely) lead to Death spirals due to the fact that if insured cannot be denied for this they will rationally calculate and ["never buy insurance at all", "only buy insurance after they get sick", "buy insurance once insurable", "buy better insurance plans"]