Question

Under what circumstances might advertising benefit society?

a. when it provides information
b. when it decreases the deadweight loss from the underallocation of resources
c. when it increases productive efficiency
d. when it increases allocative efficiency

Answer 1

Advertising benefits society by providing information, decreasing deadweight loss through better resource allocation, and increasing allocative and productive efficiency.

Step-by-step explanation:

Advertising can benefit society under certain circumstances. It has the potential to provide information to consumers about products and services, allowing them to make more informed decisions. This can lead to decreases in deadweight loss from the underallocation of resources as the market becomes more efficient.

Advertising can contribute to increasing allocative efficiency, where resources are distributed in accordance with consumer preferences, resulting in the production of a combination of goods and services that society most desires. Additionally, advertising may contribute to productive efficiency by helping firms achieve economies of scale, reducing average costs, and encouraging competition, which can lead to lower prices for consumers without sacrificing quality.