A Positive Effect of Advertising for Society Is That It

question 14

Multiple Choice

A positive effect of advertising for society is that it

• A)increases market share for the dominant firm in the industry.
• B)provides useful information to reduce search cost for consumers.
• C)raises barriers to entry into the industry and protects existing firms.
• D)creates price leadership and gives firms guidance in dealing with rivals.

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Definitions:

Compensating Variation

An economic measure of the amount of money an individual would need to reach their initial level of utility after a change in prices, policy, or economic condition.

Fractional Numbers

Numbers that represent a part of a whole, typically written with a numerator and a denominator, such as 1/2 or 3/4.

Utility Function

A representation in economics of how a consumer prefences various goods or services, leading to choices that maximize their satisfaction or utility.

Compensating Variation

A measure of the amount of money needed to compensate an individual for a change in welfare or utility, keeping utility constant.