Question

11. What are the benefits and costs of advertising from an economist’s perspective?

Answer 1

Benefits of Aadvertising are:

Advertising influences demand positively. There is room for increased demand for goods. A heightened demand naturally stimulates production. More production means more affluence.

By creating more consumption, demand, and output, ads will contribute to national revenues.

It can ease the problems of unemployment by creating more job opportunities.

Advertising is important if new useful technologies are to be commercialized or materialised. New inventions benefit the society.

Costs of Advertising are:

Advertising increases Product costs. Customers have to pay high prices for the heavily advertised products. Companies are not leaving their profits behind. Businessmen will therefore benefit money at the expense of consumers.

Valuable national resources are lost due to inappropriate usage or abundance of publicity. Companies conduct extensive promotional campaigns in many cases with no particular requirements.

Valuable national resources are lost due to inappropriate usage or abundance of publicity. Industries conduct extensive promotional campaigns in many cases with no particular requirements.

This causes needlessness. Customers are compelled to buy the goods, emotionally. At times, it encourages people to purchase unwanted goods.

It champions materialism. Whether useful or not, it makes people nuts after things.