1. Defenders of advertising argue that it:

a. informs buyers and broadens the market for goods.
b. enhances economic efficiency by lowering prices.
c. enables small firms to compete more effectively with large ones.
d. all of the above.

2. Product differentiation:

a. is a common characteristic of a perfectly competitive market structure.
b. refers to the attempt of firms to make their products look like those of the other firms in the industry.
c. is only employed in a monopoly market structure.
d. refers to the attempt of firms to make real or apparent differences in essentially substitutable products.
e. refers to the advantage big firms have in research and development.

3. Supporters of advertising claim that it:

a. promotes the public interest.
b. is a barrier to entry.
c. better quality products.
d. all of the above.

4. Critics of advertising argue that it:

a. establishes brand loyalty, which promotes competition.
b. Serves as a barrier to entry for new firms.
c. lowers price by increasing competition.
d. results in more variety of products.

5. Which of the following is true for perfect competition, monopolistic competition, and monopoly?

a. The product of all firms is homogeneous.
b. Firms will earn zero economic profits in the long run.
c. Short-run profits are maximized when marginal cost equals marginal revenue.
d. All of the above.