Asked by Emily Schreurs on May 09, 2024

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Advertising can enhance economic efficiency when it:

A) increases brand loyalty.
B) raises entry barriers.
C) increases consumer awareness of substitute products.
D) boosts average total cost.

Economic Efficiency

A state where resources are allocated in the most beneficial way for society, maximizing productivity while minimizing waste and inefficiency.

Brand Loyalty

The tendency of consumers to continuously purchase products from the same brand instead of switching to competitors.

Entry Barriers

Obstacles that make it difficult for new competitors to enter a market or industry.

  • Assess the impact of promotional activities on economic productivity, highlighting instances where it promotes and hinders efficiency.
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Verified Answer

DW
Dominique WomackMay 14, 2024
Final Answer :
C
Explanation :
Advertising that increases consumer awareness of substitute products can lead to more informed purchasing decisions, encouraging competition and ultimately driving down prices. This can enhance economic efficiency by promoting market competitiveness and reducing market power or monopolistic behavior. On the other hand, options A, B, and D are not likely to enhance economic efficiency. Brand loyalty may reduce consumer willingness to switch to competing products, reducing competition and potentially leading to higher prices. Raising entry barriers may limit competition and reduce consumer choice. Boosting average total cost may increase prices and reduce consumer surplus.