Sort the following situations as to whether or not advertising would be economically efficient or inefficient. Fish-Fil-A, a fast food fish-stick chain, uses flounders to advertise their slogan "Eat Mor Feesh" to promote their various fish products. An advertisement in the Yellow Pages states that Bride and Co. have been in the bridal consulting business for over 40 years. An advertisement is run on the benefits of drinking coffee to reduce the risk of prostate cancer. Tillamook runs an ad in Vermont claiming it makes the best cheddar cheese in the United States. An ad run on Craigslist states that a mattress is in good condition, lightly used, with minimal staining. Which of the following is true regarding advertisements? Inefficient Efficient Perfectly competitive firms have the most incentive to advertise to increase their consumer base. Advertising is only effective if the firm has some degree of market power. Advertising causes consumers to focus solely on one product in question, eliminating alternatives to the rational customer. All of the above are true regarding advertisements.

Sort the following situations as to whether or not advertising would be economically efficient or inefficient. Fish-Fil-A, a fast food fish-stick chain, uses flounders to advertise their slogan "Eat Mor Feesh" to promote their various fish products. An advertisement in the Yellow Pages states that Bride and Co. have been in the bridal consulting business for over 40 years. An advertisement is run on the benefits of drinking coffee to reduce the risk of prostate cancer. Tillamook runs an ad in Vermont claiming it makes the best cheddar cheese in the United States. An ad run on Craigslist states that a mattress is in good condition, lightly used, with minimal staining. Which of the following is true regarding advertisements? Inefficient Efficient Perfectly competitive firms have the most incentive to advertise to increase their consumer base. Advertising is only effective if the firm has some degree of market power. Advertising causes consumers to focus solely on one product in question, eliminating alternatives to the rational customer. All of the above are true regarding advertisements.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 10P

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