Asked by Kennedy Kaiser on Jul 23, 2024
Verified
Defenders of advertising argue that firms use advertising as a signal of quality, even if the advertising delivers little helpful information about the product.
Advertising
The action or business of promoting and selling products or services, including market research and advertising.
Signal of Quality
An indicator or characteristic that provides information about the quality of a product, service, or candidate, often used in situations of asymmetric information.
- Assess the impact of advertising campaigns on market performance, the inclinations of consumers, and the intensity of competition.
Verified Answer
SM
Sarah MackenzieJul 27, 2024
Final Answer :
True
Explanation :
Advertising can serve as a signal of quality because firms are willing to spend significant amounts of money on advertising, which they would be unlikely to do if their products were of low quality. This expenditure is seen as a commitment to the product's value.
Learning Objectives
- Assess the impact of advertising campaigns on market performance, the inclinations of consumers, and the intensity of competition.
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