A firm with a very good product
A)has a higher cost of signaling with advertising than does a firm with an inferior product.
B)has more to gain by signaling with advertising than does a firm with an inferior product.
C)does not need to signal with advertising because the product's quality speaks for itself.
D)will signal with advertising effectively if signaling is free.

Question

Quizplus · Accepted Answer

A firm with a very good product has more to gain by signaling with advertising than does a firm with an inferior product because advertising can help differentiate its superior product from competitors, potentially increasing its market share and profitability.

A Firm with a Very Good Product