The debate over the efficiency of markets in which products with brand names are sold
A)is framed by the role of regulation in advertising.
B)is likely to be resolved by reference to anecdotal evidence.
C)hinges on whether consumers are rational in their choices.
D)hinges on the effectiveness of advertising that identifies price differences.

Question

Quizplus · Accepted Answer

The efficiency of markets in which products with brand names are sold ultimately hinges on whether consumers are rational in their choices. If consumers make informed decisions based on the quality and value of a product, brand names can effectively communicate information and create market efficiency. However, if consumers are influenced by advertising and brand names without considering other factors, market inefficiencies can result. The role of regulation in advertising and the effectiveness of advertising that identifies price differences are related but not the primary factors in this debate. Anecdotal evidence is not sufficient to resolve this complex issue.

The Debate Over the Efficiency of Markets in Which Products