How does advertising signal to consumers that the product is a good one?
A)By seeing famous people using the product, consumers infer that they too can be famous.
B)By being willing to spend money on advertising, firms let consumers know the product is likely a good one since firms would not likely advertise a poor product.
C)By making consumers laugh during commercials, firms are associating positive experiences with the product.
D)Without allowing consumers to actually use the product, it is not possible for firms to signal to consumers the product's quality.

Question

Quizplus · Accepted Answer

By being willing to spend money on advertising, firms are essentially signaling to consumers that the product is likely a good one since firms would not likely advertise a poor product. This is because advertising can be costly, and it is unlikely that a firm would invest such resources into a product that is not expected to generate a return on investment.

How Does Advertising Signal to Consumers That the Product Is