Use the Information Below to Answer the Following Questions

question 95

Essay

Use the information below to answer the following questions.
Amy is seven years old and loves to play with dolls. In fact, she has more than 20 Barbie dolls and lots of clothes and accessories, including three cars, a house with furniture, and an airplane. Mattel, the manufacturer of Barbie, also sells many other products with the Barbie brand, such as games, notebooks, and girls' clothing, to name a few.
-One ad for Barbie shows an animated Barbie character diving off of a diving board doing flips and twists before landing in a pool.The commercial was advertising a Barbie doll with a diving board that can be attached to the side of a bathtub.Amy begged her mother for the doll and got it,but she was very disappointed when the doll did not perform as she had seen it perform in the commercial.She realized she had to hold on to the doll to make it flip around and dive into the water.What was wrong with this ad?

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Definitions:

Efficient Price

A market price that reflects all available information and results in an allocation of resources that maximizes overall utility.

Marginal Cost

The incurred cost from generating one more unit of a product or service.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.