1. Advertising: A) is about price and quality only. B) is informative only. C) i
ID: 1220671 • Letter: 1
Question
1. Advertising:
A) is about price and quality only.
B) is informative only.
C) infers that the seller expects the product to make a big splash.
D) is only when the seller fears the product will not make a big splash. (incorrect)
2. The movie The Invention of Lying takes place in a world where everyone can only tell the absolute truth. An advertisement for Coke admits there is nothing new about the product and that it's basically just brown sugar water. It ends with the tagline: “Coke. It's very famous.” How is Coke using advertising in this fictional advertisement?
A) as a signal (incorrect answer)
B) as conveying new information
C) as part of the product
D) both as a signal and the conveyor of new information
3. Firms that expect their products to be successful:
A) have more of an incentive to advertise.
B) have less of an incentive to advertise.
C) will only participate in price advertising.
D) can better signal the quality of their product if they do NOT advertise
Explanation / Answer
1) C) infers that the seller expects the product to make a big splash. as advertising promotes the product in the market.
2) C) as part of the product. as it is not conveying any new information or signal.
3) have less incentive to advertise as it will increase cost.
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