According to economic signaling theory, consumers may : GMAT Reading Comprehension (RC)
Check GMAT Club Decision Tracker for the Latest School Decision Releases http://gmatclub.com/AppTrack

 It is currently 19 Jan 2017, 09:18

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

According to economic signaling theory, consumers may

Author Message
TAGS:

Hide Tags

Senior Manager
Status: Making every effort to create original content for you!!
Joined: 23 Dec 2010
Posts: 490
Location: United States
Concentration: Healthcare, Social Entrepreneurship
GMAT 1: 660 Q48 V34
GMAT 2: 750 Q49 V42
Followers: 348

Kudos [?]: 1921 [3] , given: 82

According to economic signaling theory, consumers may [#permalink]

Show Tags

28 Mar 2013, 02:54
3
KUDOS
Expert's post
1
This post was
BOOKMARKED
According to economic signaling theory, consumers may perceive the frequency with which an unfamiliar brand is advertised as a cue that the brand is of high quality. The notion that highly advertised brands are associated with high-quality products does have some empirical support. Marquardt and McGann found that heavily advertised products did indeed rank high on certain measures of product quality. Because large advertising expenditures represent a significant investment on the part of a manufacturer, only companies that expect to recoup these costs in the long run, through consumers' repeat purchases of the product, can afford to spend such amounts.

1) Which of the following best describes the purpose of the highlight sentence?
A) To Show that economic signaling theory fails to explain a finding
B) To introduce a distinction not accounted for by economic signaling theory
C) To account for an exception to a generalization suggested by Marquardt and McGann
D) To explain why Marquardt and McGann's research was conducted
E) To offer an explanation for an observation reported by Marquardt and McGann
[Reveal] Spoiler: OA
E

2) The primary purpose of the passage is to
A) present findings that contradict one explanation for the effects of a particular advertising practice
B) argue that theoretical explanations about the effects of a particular advertising practice are of limited value without empirical evidence
C) discuss how and why particular advertising practices may affect consumers' perceptions
D) contrast the research methods used in two different studies of a particular advertising practice
E) explain why a finding about consumer responses to a particular advertising practice was unexpected
[Reveal] Spoiler: OA
C

3) Kirmani's research, as described in the passage, suggests which of the following regarding consumers' expectations about the quality of advertised products?
A) Those expectations are likely to be highest if a manufacturer runs both black-and-white and color advertisements for the same product.
B) Those expectations can be shaped by the presence of color in an advertisement as well as by the frequency with which an advertisement appears.
C) Those expectations are usually high for frequently advertised new brands but not for frequently advertised familiar brands.
D) Those expectations are likely to be higher for products whose black-and-white advertisements are often repeated than for those whose color advertisements are less often repeated.
E) Those expectations are less definitively shaped by the manufacturer's advertisements than by information that consumers gather from other sources.
[Reveal] Spoiler: OA
B

4) Kirmani's third study, as described in the passage, suggests which of the following conclusions about a black-and-white advertisement?
A) It can be repeated more frequently than a comparable color advertisement could before consumers begin to suspect low manufacturer confidence in the quality of the advertised product.
B) It will have the greatest impact on consumers' perceptions of the quality of the advertised product if it appears during periods when a color version of the same advertisement is also being used.
C) It will attract more attention from readers of the print publication in which it appears if it is used only a few times.
D) It may be perceived by some consumers as more expensive than a comparable color advertisement.
E) It is likely to be perceived by consumers as a sign of higher manufacturer confidence in the quality of the advertised product than a comparable color advertisement would be.
[Reveal] Spoiler: OA
A

5) The passage suggests that Kirmani would be most likely to agree with which of the following statements about consumers' perceptions of the relationship between the frequency with which a product is advertised and the product's quality?
B Because most consumers do not notice the frequency of advertisement, it has little impact on most consumers' expectations regarding product quality.
D) The frequency of advertisement is not always perceived by consumers to indicate that manufacturers are highly confident about their products' quality.
E) Consumers who try a new product that has been frequently advertised are likely to perceive the advertisement's frequency as having been an accurate indicator of the product's quality.
[Reveal] Spoiler: OA
D

_________________

If you have any questions
New!
Intern
Joined: 16 Oct 2012
Posts: 33
Location: India
Concentration: Operations, Healthcare
GMAT Date: 05-24-2013
GPA: 3.77
WE: Engineering (Computer Software)
Followers: 0

Kudos [?]: 7 [0], given: 21

Re: According to economic signaling theory, consumers may [#permalink]

Show Tags

28 Mar 2013, 11:42
I got EABAD.. , got the second question wrong,can anyone explain?
_________________

All Gmatclub Forum tags at one place
http://gmatclub.com/forum/viewforumtags.php

Senior Manager
Status: Final Lap
Joined: 25 Oct 2012
Posts: 287
Concentration: General Management, Entrepreneurship
GPA: 3.54
WE: Project Management (Retail Banking)
Followers: 3

Kudos [?]: 289 [2] , given: 85

Re: According to economic signaling theory, consumers may [#permalink]

Show Tags

01 Apr 2013, 06:11
2
KUDOS
Hi samvit

2) The primary purpose of the passage is to

A) present findings that contradict one explanation for the effects of a particular advertising practice
Wrong: The passage is not dealing with a particular advertising practice BUT with severel ones ( i.e advertising heavily , use of color ...)

B) argue that theoretical explanations about the effects of a particular advertising practice are of limited value without empirical evidence
Wrong: same issue as A

C) discuss how and why particular advertising practices may affect consumers' perceptions
Correct:
How: According to economic signaling theory, consumers may perceive the frequency with which an unfamiliar brand is advertised as a cue that the brand is of high quality.
Why: Because large advertising expenditures represent a significant .....

How: use of color affected consumer perception of brand quality.

D) contrast the research methods used in two different studies of a particular advertising practice
Wrong: same issue as A and B

E) explain why a finding about consumer responses to a particular advertising practice was unexpected
Wrong: same issue

Always read the questions carefully ....

Hope that helps

_________________

KUDOS is the good manner to help the entire community.

Verbal Forum Moderator
Joined: 05 Nov 2012
Posts: 544
Concentration: Technology, Other
GMAT 1: 0 Q47 V29
Followers: 35

Kudos [?]: 390 [0], given: 606

According to economic signaling theory, consumers may [#permalink]

Show Tags

16 Aug 2015, 07:08
Time Taken <7 mins. All correct.
_________________

--------------------------------------------------------
Regards

Intern
Joined: 09 Sep 2014
Posts: 11
Followers: 0

Kudos [?]: 0 [0], given: 4

Re: According to economic signaling theory, consumers may [#permalink]

Show Tags

12 Nov 2016, 20:23
Got only Q4 wrong.
Re: According to economic signaling theory, consumers may   [#permalink] 12 Nov 2016, 20:23
Similar topics Replies Last post
Similar
Topics:
Mainstream liberal economic theory: 3 29 Oct 2015, 18:38
12 According to a recent theory, Archean-age gold-quartz vein 10 27 Jul 2012, 10:32
According to a recent theory, Archean-age gold-quartz vein 0 24 Dec 2011, 04:40
1 The two main theories of arbitration may be 5 13 Jun 2009, 05:10
3 According to a theory advanced by researcher Paul Martin 14 10 Apr 2009, 02:11
Display posts from previous: Sort by