Firms pay famous individuals to endorse their products because
A) famous people only consume high-quality products.
B) apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product.
C) famous people obviously know what are the best goods and services.
D) the firms are irrational and are wasting advertising expenditures.
B
You might also like to view...
Which of the following equations correctly lists the component parts of GDP?
a. GDP = C + I – G + (X + M) b. GDP = C + I + G + (X + M) c. GDP = C + I + G + (X – M) d. GDP = C + I + (X – M) e. GDP = C + I + G
Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely:
A. ignore this merger because of the relatively small size of, and increase in, the Herfindahl index. B. prevent the merger, contending that it violates the Clayton Act. C. allow the merger if foreign entry to the industry is possible. D. allow the merger but watch the new firm carefully for future violations of the antitrust laws.