If a Small Business Owner Wants to Use Television Advertising,he/she

question 46

Multiple Choice

If a small business owner wants to use television advertising,he/she should:

• A)go for national advertising to get the maximum absolute cost advantage.
• B)try to use cable which costs $200 or less for a 30 second spot.
• C)consider radio instead because they have identical advantages.
• D)remember that television is one of the least flexible media.

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Definitions:

Coase Theorem

An economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.

External Costs

Costs generated by a production or consumption activity that are not borne by the producer or consumer but by society at large.

Transaction Costs

Costs associated with the process of buying and selling, including search and information costs, bargaining costs, and enforcement costs.