The ABC Computer Company spends a lot of money for advertising designed to convince you that their personal computers are superior to all other personal computers. If the ABC Company is successful, the demand for ABC personal computers
A) and the demand for other firmsʹ personal computers will become less price elastic.
B) and the demand for other firmsʹ personal computers will become more price elastic.
C) will become more price elastic, but the demand for other firmsʹ personal computers will become less price elastic.
D) will become less price elastic, but the demand for other firmsʹ personal computers will become more price elastic.

Question

Quizplus · Accepted Answer

If ABC Computer Company successfully convinces consumers that their personal computers are superior, consumers will be less sensitive to price changes for ABC's computers, making the demand less price elastic. Conversely, other firms' computers will be seen as substitutes and consumers will be more sensitive to their price changes, making the demand for these more price elastic.

The ABC Computer Company Spends a Lot of Money for Advertising