Information advertising might provide information about prices in stores, or it might provide information about product characteristics that consumers might not know about. Which one do you think is more likely to be efficient?
What will be an ideal response?
When the information conveyed is about prices, the advertising makes consumers aware of where products are sold at what prices -- thus increasing competition and decreasing any ability to price above marginal cost. When the information conveyed is about product characteristics, the aim might be to differentiate the product so as to gain some market power. The former is therefore more likely to be efficient, but the latter can be efficiency enhancing as well if the surplus generated by the product characteristics outweighs the deadweight loss from market power being exercised.
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A) 7200 B) 8250 C) 1050 D) 7500 E) none of the above
Once the Federal Trade Commission's (FTC) Bureau of Consumer Protection investigators have decided that a company's advertising is illegal, it can do all of the following except which one?
A) prevent the company from selling its product B) attempt to convince the company to cease its advertising C) attempt to convince the company to change its advertising D) issue a cease -and-desist order
Signaling is
a. actions by the informed party to reveal her true risks b. actions by the informed party to conceal her true risks c. actions by the uninformed party to uncover the true risks d. actions by the uninformed party to conceal the true risks
Suppose policy makers are concerned about a shortage of long-term capital investment. To remedy the problem, various plans to cut capital gains taxes have been suggested. The delay in picking a plan is called the _____
a. implementation lag b. policy coordination problem c. decision-making lag d. recognition lag e. effectiveness lag