Question

In: Economics

When it comes the subject of Economics. Why could advertising be seen as a benefit towards...

When it comes the subject of Economics. Why could advertising be seen as a benefit towards society? And in other ways how can advertising be seen as harmful?

Solutions

Expert Solution

Advertising can actually increase the awareness of the the product and is it tell how could potential products be beneficial if they are used in a proper way and this can reduce the problem of asymmetric information as a result of which people are more aware updates pending as a result of which more amount of competitiveness can be generated among the companies in order to capture the customers on the whole and this will be better for the social welfare purposes. In this way according to economics social welfare is maximized and this is the benefit of advertising.

But there is a downside of advertising too in economic terms wherethe advertising cost are very high for certain industries as a result of which this would add on to the cost of the product and as a result of this the customers get to pay more than the required amount for the product and with this their surplus is produced as a result of which the amount of consumption can reduce and in this way it is harmful


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