In a market characterized by many buyers and one seller, investment in informative advertising by a seller can ____ the price of a commodity to customers and lower their _____ cost of acquiring information.
A)decrease; sunk cost
B)increase; transaction cost
C)increase; sunk cost
D)decrease; transaction cost

Question

Quizplus · Accepted Answer

Informative advertising can increase the price of a commodity as it adds value or perceived value to the product, and it lowers the transaction cost for customers by reducing the effort and time needed to acquire information about the product.

In a Market Characterized by Many Buyers and One Seller