If We Observe a Great Deal of Advertising of Men's

question 376

Multiple Choice

If we observe a great deal of advertising of men's shaving products, we can infer that

• A)the market for those products is perfectly competitive.
• B)it costs firms very little to produce those products.
• C)those products are highly differentiated.
• D)firms are irrational in their decisions to advertise.

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Definitions:

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account.

Margin Call

A demand by a broker that an investor deposit additional money or securities to cover possible losses.

Initial Margin

The minimum amount of equity that must be provided by an investor when purchasing securities on margin, acting as a down payment on the purchase.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account to continue holding an investment, after initiating a position.