Asked by Corren Bouton on May 28, 2024
Verified
Those who are critical of advertising argue that it:
A) tends to make markets behave more like perfectly competitive markets.
B) leads to a shortage of high-cost,high-quality goods.
C) results in higher prices to consumers.
D) encourages competition through price comparison.
Perfectly Competitive Markets
A market structure characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to price-taking behavior.
Higher Prices
A situation where the costs of goods or services increase, which could be due to various factors including inflation, increased demand, or higher production costs.
- Familiarize oneself with the role and outcomes of advertising in a monopolistically competitive economic setting.
- Understand the impact of brand names and advertising on consumer perceptions and market dynamics.
Verified Answer
JG
Jeron GallimoreJun 02, 2024
Final Answer :
C
Explanation :
Critics argue that advertising results in higher prices for consumers, as companies incur the cost of advertising and pass it on to the consumer in the form of higher prices. This is because advertising is essentially a form of product differentiation, allowing companies to charge higher prices for their unique or perceived superior products.
Learning Objectives
- Familiarize oneself with the role and outcomes of advertising in a monopolistically competitive economic setting.
- Understand the impact of brand names and advertising on consumer perceptions and market dynamics.