Scenario: You have been invited for a job interview to Armenian Tobacco, a company producing and selling cigarette products in Armenia and abroad. Before going to interview you discussed it with your friends and you all agreed that the cigarettes' market structure can be considered as monopolistically competitive. Upon arriving to the interview you receive a short questionnaire, as follows: Armenian Tobacco is developing its strategy for the next few years, and among others we would like to know your opinion about the following points: 1) We would like to increase our advertising expenditures abroad as we believe it will enable us to gain more market share in our overseas operations. What is your opinion about advertising expenditures and their economic purpose? 2) There is a certain threat that in the future the World Health Organization will make all the countries to remove any labeling from cigarette boxes - all the boxes of all cigarettes area going to be the same without any indication of brand. Many believe that this might change the market structure for cigarettes, from monopolistically competitive to something very close to perfect competition. Could you please explain the reasons behind such beliefs and what would happen to company's long-term demand curve if this market structure change turns out to be true.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Scenario: You have been invited for a job interview to Armenian Tobacco, a company producing and
selling cigarette products in Armenia and abroad. Before going to interview you discussed it with your
friends and you all agreed that the cigarettes' market structure can be considered as monopolistically
competitive. Upon arriving to the interview you receive a short questionnaire, as follows:
Armenian Tobacco is developing its strategy for the next few years, and among others we would like to
know your opinion about the following points:
1) We would like to increase our advertising expenditures abroad as we believe it will enable us to
gain more market share in our overseas operations. What is your opinion about advertising
expenditures and their economic purpose?
2) There is a certain threat that in the future the World Health Organization will make all the
countries to remove any labeling from cigarette boxes – all the boxes of all cigarettes area going
to be the same without any indication of brand. Many believe that this might change the market
structure for cigarettes, from monopolistically competitive to something very close to perfect
competition. Could you please explain the reasons behind such beliefs and what would happen
to company's long-term demand curve if this market structure change turns out to be true.
Transcribed Image Text:Scenario: You have been invited for a job interview to Armenian Tobacco, a company producing and selling cigarette products in Armenia and abroad. Before going to interview you discussed it with your friends and you all agreed that the cigarettes' market structure can be considered as monopolistically competitive. Upon arriving to the interview you receive a short questionnaire, as follows: Armenian Tobacco is developing its strategy for the next few years, and among others we would like to know your opinion about the following points: 1) We would like to increase our advertising expenditures abroad as we believe it will enable us to gain more market share in our overseas operations. What is your opinion about advertising expenditures and their economic purpose? 2) There is a certain threat that in the future the World Health Organization will make all the countries to remove any labeling from cigarette boxes – all the boxes of all cigarettes area going to be the same without any indication of brand. Many believe that this might change the market structure for cigarettes, from monopolistically competitive to something very close to perfect competition. Could you please explain the reasons behind such beliefs and what would happen to company's long-term demand curve if this market structure change turns out to be true.
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