Advertising quiz #1 Flashcards
Advertising quiz #1
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What is advertising in the context of monopolistic competition? Advertising in monopolistic competition is used by firms to differentiate their products, create demand, and inform customers about prices, new products, and locations. Which of the following is a reason advertising can be economically wasteful? Advertising can be economically wasteful when it relies on psychological tactics rather than providing useful information, leading to unnecessary spending without increasing consumer knowledge. What marks a successful advertising campaign by a monopolistically competitive firm? A successful advertising campaign leads consumers to try the product and, if satisfied, continue purchasing it, thereby increasing demand and customer loyalty. Why does a monopolistically competitive firm advertise? A monopolistically competitive firm advertises to differentiate its product, signal quality, attract new customers, and create brand loyalty. How do brand names function in monopolistic competition? Brand names help differentiate products and create an expectation of quality for consumers, encouraging brand loyalty and consistent product standards. What psychological effect do commercials often aim to achieve in consumers? Commercials often aim to associate products with positive emotions or desirable lifestyles, influencing consumers to believe they will be happier or more fulfilled by purchasing the product. Why might consumers perceive a product as high quality simply because it is advertised? Consumers may reason that if a firm spends significant money on advertising, the product must be good, prompting them to try it. How does advertising influence consumer behavior in monopolistic competition? Advertising can persuade consumers to try a product and, if satisfied, continue purchasing it, thereby increasing demand and fostering customer loyalty. What incentive do firms have to maintain product quality when using brand names? Firms are incentivized to maintain product quality to protect their brand reputation and retain loyal customers who expect consistent quality. Besides informing about prices and locations, what other purpose does advertising serve for new products? Advertising introduces new products to consumers, encouraging them to try something they may not have considered otherwise.
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