How can advertising make a firm’s demand curve more inelastic?
Advertising is intended to increase a firm’s demand curve by increasing consumer awareness of the firm’s products and improving its image. It is intended to make its demand curve more inelastic by convincing buyers that is products are truly different (better) than alternatives (remember that the number of good substitutes is the primary determinant of a firm’s elasticity of demand) 2. What are the arguments made against advertising? Some people argue that advertising manipulates consumer tastes and creates artificial “needs” for unimportant products, taking resources away from more valuable uses. 3. What are the arguments made for advertising? The essential argument for advertising is that it conveys valuable information to potential customers about the products and options available to them and the prices at which they are available, helping them to make choices that better match their situations and preferences 4. Can advertising actually result in lower costs? How? Advertising can
