According to One Theory, Advertising Sends a Signal to Consumers

question 532

Multiple Choice

According to one theory, advertising sends a signal to consumers about the quality of the product being offered. An implication of this theory is that

• A)the actual quality of the product is irrelevant.
• B)the content of the advertisement is irrelevant.
• C)advertising is not in the best interest of society.
• D)it is irrational for firms to pay famous people large amounts of money to appear in their advertisements.

---

Definitions:

Corporate Organization

The structured arrangement of roles, responsibilities, and relationships within a corporation to facilitate management and operations.

Transfer of Ownership

The act of conveying property or title from one person or entity to another.

Limited Life

Refers to the finite duration for which an entity, such as a corporation or partnership, is established to operate.

Double Taxation

A tax principle referring to income taxes paid twice on the same source of income, often seen in corporate dividends taxed at both the corporate and personal levels.