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Homework answers / question archive / Why the simultaneous targeting of the money supply and interest rates is sometimes impossible to achieve? How do central banks intervene in foreign exchange markets? What did the Bretton Woods Agreement do to the ability of foreign exchange rates to fluctuate freely?
Why the simultaneous targeting of the money supply and interest rates is sometimes impossible to achieve?
How do central banks intervene in foreign exchange markets?
What did the Bretton Woods Agreement do to the ability of foreign exchange rates to fluctuate freely?
Tots-R-Us should incur the advertising expenditure immediately after being aware of its potential competitors. It should not wait for its competitors to enter the market. The reason is that if Tots-R-Us incurs the advertising expenditure before the other firms enter the market, it is able to acquire a larger market base. It makes it difficult for the competitors to enter the market as barriers to entry in the form of huge costs are involved. If there are high barriers to entry in the industry, Tots-R-Us will be able to exercise a monopoly.
Advertising can help Tots-R-Us to keep price above the average costs. Advertising will generate large customer base for the company which will generate sales and revenue. Larger sales will help the company experience economies of scale which will reduce the average costs. Also, high demand in the market will help the company keep high price for their product.
