____ 5. When advertising is used to strengthen brand loyalty, what results? a. D
ID: 2439921 • Letter: #
Question
____ 5. When advertising is used to strengthen brand loyalty, what results?
a.
Demand for the product becomes less elastic.
b.
Demand for related products is typically unaffected.
c.
Consumers become more sensitive to price differences among similar goods.
d.
Firms lower prices to increase revenue.
____ 6. Advertising that conveys information about the existence of new products results in which of the following?
a.
It usually confuses consumers about market competition.
b.
It enhances the ability of markets to allocate resources efficiently.
c.
It reveals information that is of little value to consumers.
d.
It increases elasticity of demand.
____ 7. Defenders of advertising argue that it is not rational for profit-maximizing firms to spend money on advertising for products that have which of the following?
a.
superior quality
b.
inferior or mediocre quality
c.
low prices
d.
limited availability
____ 8. When we compare diagrams for firms in different market structures, what do we notice?
a.
For competitive firms and monopolistically competitive firms, the revenue curves are similar but the cost curves are quite different.
b.
For competitive firms and monopolistically competitive firms, the cost curves are similar but the revenue curves are quite different.
c.
For monopoly firms and monopolistically competitive firms, the revenue curves are similar but the cost curves are quite different.
d.
For monopoly firms and monopolistically competitive firms, the cost curves are similar but the revenue curves are quite different.
a.
Demand for the product becomes less elastic.
b.
Demand for related products is typically unaffected.
c.
Consumers become more sensitive to price differences among similar goods.
d.
Firms lower prices to increase revenue.
Explanation / Answer
5. When advertising is used to strengthen brand loyalty then, customers become loyal towards the companies product means they become less sensitive towards the price.
A. Demamd for the product becomes less elastic.
6. When new products are advertised then consumers come to know about more number of product that is number of substitutes suailable increases.
D. It increases the elasticity of demand.
7. Defenders of advertising argue that it is not rational for profit maximizing firm's to spend money on advertising for products which
B. Inferior and mediocre quality.
8. In case of perfect competition the MR is constant and equal to price. While in case of Monopolistic competition the MR is in the shape of wedge with the demand curve. First option is not correct.
The cost curve of Perfect Competition is similar to that of Monopolistic market as in both large number of sellers are there in the market hance their cost behaviour are identical. Revenue of both markets are different.
Option B is correct.
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