4. The role of brand names and advertising Which of the following statements about expenditures onadvertising is
Question:
4. The role of brand names and advertising
Which of the following statements about expenditures onadvertising is true?
1.
If a firm knows its product is of low quality, it will bewilling to spend large amounts of money on advertising.
2.
When a firm spends a small amount of money on advertising, thissignals that the quality of the good is high.
3.
When a firm spends a large amount of money on advertising,advertising can be construed as a signal of quality.
Read the following example and determine whether itillustrates a common critique or defense ofadvertising.
Kevin sees a commercial for a Brand X clothing company thatdepicts the wearers of the clothes out having a good time withfriends. Although he doesn't particularly need new clothes, thecommercial prompts him to buy a Brand X t-shirt.
FILL IN THE BLANKS
This illustrates a common..........(Crtique orDefense) of advertising.
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba