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How might advertising lead to a shift in the
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- how does advertising affect price elasticity?How do companies make long-run pricing decisions?If a company successfully advertises its product, do we expect the price elasticity of demand for this firms perceived demand curved to increase, decrease or remain the same? Explain how advertising can cause this effect.
- Why may a company intentionally limit supply when consumers want more of a product?In the world of French high cuisine, a three-star rating from the Michelin Red Guide is a widely accepted indicator of gastronomic excellence. French consumers consider Gault Milleau, another restaurant guide, not as authoritative as the Michelin guide because Gault Milleau, unlike Michelin, accepts advertising and its critics accept free meals. Why are guides' ratings important to restaurant owners and chefs? Discuss the effect of a restaurant's rating on the demand for the restaurant. a. A) It provides information to consumers regarding the restaurant's quality, thus, reducing the moral hazard problem. A high rating can increase demand B)It provides information to consumers regarding the restaurant's quality, thus, reducing the adverse selection problem. A high rating can increase demand. b. Why do advertising and free meals taint the credibility of Gault Milleau? Discuss the moral hazard problem of Gault Milleau's ratings. A) The critics may be biased toward restaurants that give…If you want to increase demand for your restaurantbut are unable to lower prices or increase advertising,what steps might you take?
- In what situation would a company give a discount?Why do suppliers want to create more inelastic demand relationships in the products that they sell?Which of these is likely to be an effect of advertising? Shifts out the demand curve Shift out the supply curve Shifts out and rotates the demand curve All the other answers are wrong