Most businesses advertise their products and services. Some business use SPAM emails to advertise because the cost of a mass e-mail is close to zero. Other business spend millions of dollars to advertise in a 30-second spot during the Super Bowl. Having observed this real world data, economists argue that the amount of money that a business spends on advertising is a proxy for a good or service's

Question

Quizplus · Accepted Answer

The amount of money that a business spends on advertising is believed to be a proxy for a good or service's quality. Generally, products that are of higher quality tend to require more expensive advertising to promote them effectively. Conversely, a lower quality product may require less expensive advertising, as it may not need as much promotion to sell.

Most Businesses Advertise Their Products and Services