When advertising encourages customers to become more informed about all firms in the market:

Question

Quizplus · Accepted Answer

When advertising encourages customers to become more informed about all firms in the market, customers are more likely to compare prices, quality, and features of all products or services offered by different firms. This can lead to more competition in the market, reducing the market power of each individual firm. Therefore, option B is the best choice.

Option A is incorrect because the elasticity of demand for a brand is not directly related to the level of information customers have about all firms in the market.

Option C is incorrect because stronger brand loyalty is more likely to be fostered by selective advertising that emphasizes the unique features of a particular brand, rather than all brands in the market.

Option D is incorrect because widespread market information tends to increase competition, reducing the market power of individual firms rather than strengthening it.

When Advertising Encourages Customers to Become More Informed About All