Question

1. How might advertising with no apparent informational content in fact convey information to consumers?

2. Explain two benefits that might arise from the existence of brand names.

Answer 1

1.Solution:-Here give the main causes of Advertising might  no apparent informational content in fact convey information to consumers.Advertising might reduce economic well-being because it is costly, manipulates people'stastes, and impedes competition by making products appear more different than theyreally are. But advertising might increase economic well-being by providing usefulinformation to consumers and fostering competition.Advertising with no apparent informational content might convey information toconsumers if it provides a signal of quality.A firm won't be willing to spend muchmoney advertising a low-quality good, but will be willing to spend significantly moreadvertising a high-quality good.

2.solution:-Important factors for benefits that might arise from the existence of brand names.(1) brand names provide consumers information about quality when quality cannot beeasily judged in advance.(2) Brand names give firms an incentive to maintain high quality to maintain thereputation of their brand names.