Which of the following is a commonly-cited benefit of advertising?
A)Advertising can be a signal of the quality of a product.
B)Advertising impedes competition.
C)Advertising reduces the deadweight loss associated with monopolistic competition.
D)Advertising encourages free entry, which increases profits.

Question

Quizplus · Accepted Answer

Advertising can serve as a signal of the quality of a product, as companies that invest in high-quality advertising may be assumed to also invest in producing high-quality products. This can increase consumer confidence and willingness to purchase the product. Options B, C, and D are incorrect as they do not represent commonly-cited benefits of advertising.

Which of the Following Is a Commonly-Cited Benefit of Advertising