Question

If a firm engages in false advertising, it might be

investigated by the Federal Trade Commission (FTC) and have its products removed from the market.

shut down by the Department of Justice.

subject to “penalty by collusion.”

shut down by the Securities and Exchange Commission (SEC).

investigated by the Stock Market Investigation Bureau (SMIB).

False advertising is generally regulated by

the Federal Trade Commission (FTC).

the Nuclear Regulatory Commission (NRC).

the Securities and Exchange Commission (SEC).

the Antitrust Division of the Department of Justice.

state and local governments.

Markup would generally be lowest under

a monopoly.

a collusive industry.

a cartel.

monopolistic competition.

an oligopoly.

When would advertising be least effective for an individual firm?

in a monopoly industry

Never; advertising is equally effective in all industries.

in an oligopolistic industry

in a perfectly competitive industry

in a monopolistically competitive industry

Answer 1

Question 1

False advertising is considered as an illegal action on part of the firm.

If a firm engages in false advertising, it might be investigated by the Federal Trade Commission (FTC) and have its products removed from the market.

Hence, the correct answer is the option (a).

Question 2

The Federal Trade Commission has the responsibility to regulate the false advertising.

So,

It can be stated that false advertising is generally regulated by the Federal Trade Commission.

Hence, the correct answer is the option (a).

Question 3

Mark Up refers to the addition to the total cost as done by the firm to inculcate profit and other overheads.

Mark Up depends on the market power of firm.

Out of all the given market structures, monopolistic competition is the market situation where firm has least market power.

So,

Mark Up would generally be lowest under monopolistic competition.

Hence, the correct answer is the option (d).

Question 4

When firms sell homogeneous product then, in that case, advertising would be least effective.

It is in perfectly competitive industry that firms sell homogeneous product.

So,

In a perfectly competitive industry, advertising would be least effective for an individual firm.

Hence, the correct answer is the option (d).