Defenders of advertising argue that firms use advertising as a signal of quality, even if the advertising delivers little helpful information about the product.

Question

Quizplus · Accepted Answer

Advertising can serve as a signal of quality because firms are willing to spend significant amounts of money on advertising, which they would be unlikely to do if their products were of low quality. This expenditure is seen as a commitment to the product's value.

Defenders of Advertising Argue That Firms Use Advertising as a Signal