chap. 17
Post on 21-Jun-2015
1.011 Views
Preview:
TRANSCRIPT
Chapter 17Monopolistically Competition
The Debate over Advertisement
The critique of advertisingControl people’s tastes
More psychological than informational
Convince people than their product is unique and efficient although it might not be true
The Defense of AdvertisementProvide information to customers, so that they can make better
choices
Make market more competitive
Does advertisement means quality?Economist says that advertisement means that it ensures quality.
Rational theory is that firms who are confident about the quality of their products advertise
but firms whose product is a mediocre choose to improve the quality instead of advertising.
What do people think about advertisement
Brand NamesWillingness to pay for consumers is higher for specific brand names.
Brand names provide consumers with information about quality when quality cannot be judged in advance
top related