Which of the Following Is a Commonly-Cited Benefit of Advertising

question 53

Multiple Choice

Which of the following is a commonly-cited benefit of advertising?

• A)Advertising can be a signal of the quality of a product.
• B)Advertising impedes competition.
• C)Advertising reduces the deadweight loss associated with monopolistic competition.
• D)Advertising encourages free entry, which increases profits.

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Definitions:

Net Income

The company’s earnings remaining after total revenue has been adjusted for expenses, taxes, and other charges.

Liabilities

The financial obligations or debts a company owes to others.

Owner's Equity

The residual interest in the assets of a entity after deducting liabilities, representing what the owners own outright.

Creditors' Risk

The risk faced by lenders that borrowers may default on their debt obligations, potentially leading to financial losses.