How Does Advertising Signal to Consumers That the Product Is

question 61

Multiple Choice

How does advertising signal to consumers that the product is a good one?

• A)By seeing famous people using the product, consumers infer that they too can be famous.
• B)By being willing to spend money on advertising, firms let consumers know the product is likely a good one since firms would not likely advertise a poor product.
• C)By making consumers laugh during commercials, firms are associating positive experiences with the product.
• D)It is not possible, without allowing consumers to actually use the product, for firms to signal to consumers the product's quality.

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Definitions:

Licensed to Sell

The authorization given to individuals or companies to engage in the selling of certain products or services.

Antitrust Lawsuit

A legal action taken against parties alleged to have violated antitrust laws, aimed at promoting competition and preventing monopolies.

Resale Price Maintenance

A practice where a manufacturer and its distributors agree on the selling prices of the products to end customers.

Predatory Pricing

A strategy whereby a dominant company temporarily reduces prices to a level that is unprofitable for competitors in order to drive them out of the market.