Monopolistic Competition: End of Chapter Problem In a famous article on advertising, Gary Becker and Kevin Murphy wrote about advertisements that run during television programs: "One can say either that advertising pays for the programming-the usual interpretation-or that programming compensates for the advertising, which is our preferred interpretation." Viewing ads during a television program (or hearing them during a radio broadcast) makes consumers worse off, so they must be compensated (with programming) for having experienced the ads. On the other hand, print ads in newspapers and magazines can be avoided by consumers, so these ads must make consumers better off; otherwise, no one would ever read them. Use this theory to answer the following questions: a. Think about the different types of advertisements discussed in the chapter (informative, signaling, part of the product). Which type is more likely to appear on TV? Which type is more likely to appear in a newspaper or magazine? Newspapers and magazines will have more informative advertisements than TV will. Newspapers and magazines will have less informative advertisements than TV will. Newspapers and magazines will have about the same amount of informative advertisements as TV. b. Becker and Murphy wrote their article before DVR systems and online streaming services became popular. Nowadays, ads on television are avoidable (to a degree), just like ads in a newspaper. What impact do you think this technology has on the types of ads you see on TV? Select all developments consistent with Becker and Murphy's theory. Television ads could become more embedded in programming by means such as product placement. Television ads could become more frequent. Television ads could become more informative. Television ads could become more entertaining. Incorrect
Monopolistic Competition: End of Chapter Problem In a famous article on advertising, Gary Becker and Kevin Murphy wrote about advertisements that run during television programs: "One can say either that advertising pays for the programming-the usual interpretation-or that programming compensates for the advertising, which is our preferred interpretation." Viewing ads during a television program (or hearing them during a radio broadcast) makes consumers worse off, so they must be compensated (with programming) for having experienced the ads. On the other hand, print ads in newspapers and magazines can be avoided by consumers, so these ads must make consumers better off; otherwise, no one would ever read them. Use this theory to answer the following questions: a. Think about the different types of advertisements discussed in the chapter (informative, signaling, part of the product). Which type is more likely to appear on TV? Which type is more likely to appear in a newspaper or magazine? Newspapers and magazines will have more informative advertisements than TV will. Newspapers and magazines will have less informative advertisements than TV will. Newspapers and magazines will have about the same amount of informative advertisements as TV. b. Becker and Murphy wrote their article before DVR systems and online streaming services became popular. Nowadays, ads on television are avoidable (to a degree), just like ads in a newspaper. What impact do you think this technology has on the types of ads you see on TV? Select all developments consistent with Becker and Murphy's theory. Television ads could become more embedded in programming by means such as product placement. Television ads could become more frequent. Television ads could become more informative. Television ads could become more entertaining. Incorrect
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Monopolistic Competition: End of Chapter Froblem
In a famous article on advertising, Gary Becker and Kevin Murphy wrote about advertisements that run during
television programs: "One can say either that advertising pays for the programming-the usual interpretation- or
that programming compensates for the advertising, which is our preferred interpretation." Viewing ads during a
television program (or hearing them during a radio broadcast) makes consumers worse off, so they must be
compensated (with programming) for having experienced the ads. On the other hand, print ads in newspapers and
magazines can be avoided by consumers, so these ads must make consumers better off; otherwise, no one would
ever read them. Use this theory to answer the following questions:
a. Think about the different types of advertisements discussed in the chapter (informative, signaling, part of the
product). Which type is more likely to appear on TV? Which type is more likely to appear in a newspaper or
magazine?
Newspapers and magazines will have more informative advertisements than TV will.
Newspapers and magazines will have less informative advertisements than TV will.
Newspapers and magazines will have about the same amount of informative advertisements as TV.
b. Becker and Murphy wrote their article before DVR systems and online streaming services became popular.
Nowadays, ads on television are avoidable (to a degree), just like ads in a newspaper. What impact do you think
this technology has on the types of ads you see on TV? Select all developments consistent with Becker and
Murphy's theory.
Television ads could become more embedded in programming by means such as product placement.
Television ads could become more frequent.
Television ads could become more informative.
Television ads could become more entertaining.
Incorrect
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