How Do Economists Explain the Value Firms and Consumers Place

question 150

Multiple Choice

How do economists explain the value firms and consumers place on brand names?

• A) Brand names show that firms can easily manipulate consumers.
• B) Brand names are a way firms can provide information about quality to consumers.
• C) Brand names are a way of turning private goods into public goods, increasing their value to both seller and buyer.
• D) Brand names are an example of adverse selection, by which producers advertise the options to consumers.

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Definitions:

Manufacturing Costs

Expenses directly associated with the production of goods, including labor, materials, and overhead.

Direct Materials

The primary raw inputs used in the manufacture of products, which are directly traceable to the production process.

Factory Depreciation

The allocation of the cost of a manufacturing or production plant and its equipment over their useful lives, reflecting the usage and wear and tear of fixed assets.

Variable Overhead

Indirect production costs that fluctuate with the level of output, such as utilities or materials.