Advertising can be a signal of quality
a. only if consumers are irrationally attracted to products they see advertised.
b. if advertising is freely available to all firms.
c. if the benefit of attracting customers is greater for firms with better products.
d. only if the content of the ads contains credible information about the products.
Answer: c. if the benefit of attracting customers is greater for firms with better products.
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Taxes can adversely affect free exchange
Indicate whether the statement is true or false
The "all other things unchanged" assumption is useful because it:
A) states the main economic objectives. B) is a vehicle for determining whether a particular outcome is "good" or "bad.". C) helps to approximate real-world conditions. D) helps to restrict analysis to the effect of a single economic factor.