Hello, please help with this question what i selected there are mere guesses tha

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Hello, please help with this question what i selected there are mere guesses

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The role of brand names and advertising Which of the following statements about expenditures on advertising is true? When a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising. When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. Read the following example and determine whether it illustrates a common critique or defense of advertising. While shopping for soda, Frances is trying to determine whether to purchase the generic cola or the brand ZCola. Although she would not notice the difference between the two in a blind taste test, she buys the higher-priced ZCola because she has seen it advertised as being "The drink that's the life of This illustrates a common critique of advertising.

Explanation / Answer

When a firm spends a large amount of money on advertising, advertising can be used as a signal of quality. This is because a firm that makes huge expenditure on advertising gives a signal to the consumer that the product is of higher quality.

This ia common critique of advertising, because people are not anymore willing to know about the product quality. They just blindly follow the advertisments.

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