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According to economic signaling theory, consumers may

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

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New post 28 Mar 2013, 03:54
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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.

However, two studies by Kirmani have found that although consumers initially perceive expensive advertising as a signal of high brand quality, at some level of spending the manufacturer's advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality. If consumers perceive excessive advertising effort as a sign of a manufacturer's desperation, the result may be less favorable brand perceptions. In addition, a third study by Kirmani, of print advertisements, found that the use of color affected consumer perception of brand quality. Because consumers recognize that color advertisements are more expensive than black and white, the point at which repetition of an advertisement is perceived as excessive comes sooner for a color advertisement than for a black-and-white advertisement.
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?
A) Consumers' perceptions about the frequency with which an advertisement appears are their primary consideration when evaluating an advertisement's claims about product quality.
B Because most consumers do not notice the frequency of advertisement, it has little impact on most consumers' expectations regarding product quality.
C) Consumers perceive frequency of advertisement as a signal about product quality only when the advertisement is for a product that is newly on the market.
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

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA
[Reveal] Spoiler: Question #5 OA

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Last edited by Skywalker18 on 21 Oct 2017, 07:56, edited 2 times in total.
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 28 Mar 2013, 12:42
I got EABAD.. , got the second question wrong,can anyone explain?
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 01 Apr 2013, 07:11
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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:
First paragraph: 1st particular advertising practice: advertising heavily
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 .....

Second paragraph: Another particular advertising practice: printed advertisements
How: use of color affected consumer perception of brand quality.
Why: Because consumers recognize that color advertisements are more expensive ....

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

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New post 16 Aug 2015, 08:08
Time Taken <7 mins. All correct.
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 12 Nov 2016, 21:23
Got only Q4 wrong.
Could anyone explain, please?

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

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New post 21 Jul 2017, 03:22
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

From the lines - "Marquardt and McGann found that heavily advertised products did indeed rank high on certain measures of product quality. Because"
we know that the highlighted portion explains the observation by M&M.
IMO, E should be the answer.


2) The primary purpose of the passage is to
A) present findings that contradict one explanation for the effects of a particular advertising practice
<this is done only in the second paragraph, not a primary purpose of the passage as a whole - incorrect >

B) argue that theoretical explanations about the effects of a particular advertising practice are of limited value without empirical evidence
<it has nowhere mentioned or implied - incorrect >

C) discuss how and why particular advertising practices may affect consumers' perceptions
<seems correct >

D) contrast the research methods used in two different studies of a particular advertising practice
<research methods are nowhere contrasted - out of scope - incorrect >

E) explain why a finding about consumer responses to a particular advertising practice was unexpected
<passage presents different findings by few researchers ; there are more than one practices - incorrect >


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.
<highest - out of scope - incorrect >

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.
<Seems correct with reference to the lines "advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality. If consumers perceive excessive advertising effort as a sign of a manufacturer's desperation, the result may be less favorable brand perceptions" >

C) Those expectations are usually high for frequently advertised new brands but not for frequently advertised familiar brands.
<no such comparison has been made - incorrect >

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.
<wrong comparison - incorrect >

E) Those expectations are less definitively shaped by the manufacturer's advertisements than by information that consumers gather from other sources.
<polar opposite - "other sources" - out of scope - incorrect>

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.
<Seems correct by referring the lines mentioned in the last paragraph - correct>

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.
<"greatest impact" nowhere mentioned - incorrect >

C) It will attract more attention from readers of the print publication in which it appears if it is used only a few times.
<out of scope - "more attention from specific readers" -incorrect >

D) It may be perceived by some consumers as more expensive than a comparable color advertisement.
<wrong comparison - incorrect >

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.
<frequency is the key differentiation not simply the color or B&W print - incorrect >

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?
A) Consumers' perceptions about the frequency with which an advertisement appears are their primary consideration when evaluating an advertisement's claims about product quality.
<"primary consideration" - out of scope - incorrect >

B) Because most consumers do not notice the frequency of advertisement, it has little impact on most consumers' expectations regarding product quality.
<out of scope - incorrect >

C) Consumers perceive frequency of advertisement as a signal about product quality only when the advertisement is for a product that is newly on the market.
<"new product" - out of scope - incorrect >

D) The frequency of advertisement is not always perceived by consumers to indicate that manufacturers are highly confident about their products' quality.
<Correct summary of the the combination of the two theories - correct >

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.
<as per the passage - advertisement too often is negatively perceived, hence incorrect >

Please let me know your views where you think I have missed the point.
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 21 Jul 2017, 03:37
GMATNinja your review would really be helpful.

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

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New post 23 Sep 2017, 03:11
Got 4/5 correct, took me 10 minutes :)

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

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New post 25 Sep 2017, 03:43
I got E, C, B, A, and A. Looking for explanation on the last one. Thanks.
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 21 Oct 2017, 05:07
Got 4/5 correct, took me 11 minutes. :|

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

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New post 21 Oct 2017, 05:23
I just want to highlight the mistake that I did while solving question 2, learning from this mistake can be critical for someone else out there. :)

2) The primary purpose of the passage is to

A) present findings that contradict one explanation for the effects of a particular advertising practice
I picked this option in my first attempt. But after reading closely and between the lines, I found out that it can be a trap answer if not read properly.

Picking the portion of passage which clearly indicates that the findings do not contradict the above explanation completely,
However, two studies by Kirmani have found that although consumers initially perceive expensive advertising as a signal of high brand quality, at some level of spending the manufacturer's advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality.

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

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New post 21 Oct 2017, 07:45
AnubhavK wrote:
I got E, C, B, A, and A. Looking for explanation on the last one. Thanks.


Hi AnubhavK,

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?

Signaling Theory: frequency of ads and product's quality are positively correlated
Kirmani's finding: Beyond a certain threshold, consumers find ads to be excessive and thus think less of a product's quality
.

A) Consumers' perceptions about the frequency with which an advertisement appears are their primary consideration when evaluating an advertisement's claims about product quality. - Incorrect - nowhere in passage it has been mentioned that frequency of advertisement is a primary consideration
B) Because most consumers do not notice the frequency of advertisement, it has little impact on most consumers' expectations regarding product quality. - Incorrect - the passage does not mention whether most consumers notice the frequency of advertisement or not
C) Consumers perceive frequency of advertisement as a signal about product quality only when the advertisement is for a product that is newly on the market. - Incorrect
D) The frequency of advertisement is not always perceived by consumers to indicate that manufacturers are highly confident about their products' quality. - Correct
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. - Incorrect - this goes against Kirmani's findings

Answer D

Hope this helps!! :-)
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Re: According to economic signaling theory, consumers may [#permalink]

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New post 21 Oct 2017, 08:34
1) Which of the following best describes the purpose of the highlight sentence?
E) To offer an explanation for an observation reported by Marquardt and McGann - Marquardt and McGann observed that there was a correlation between the frequency of advertisements for a product and that product's quality. The highlighted sentence explains why this correlation exists - because high levels of investment in a product suggests confidence in the product's quality.

2) The primary purpose of the passage is to
C) discuss how and why particular advertising practices may affect consumers' perceptions - This passage details a host of different advertising practices: frequent vs infrequent advertisements; color vs black and white advertisements with respect to frequency, etc. We then receive explanations for how consumers respond in each of these scenarios.

3) Kirmani's research, as described in the passage, suggests which of the following regarding consumers' expectations about the quality of advertised products?
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. - Kirmani discovered that beyond a critical threshold, additional advertising seems to hurt perceptions of a product's quality. Kirmani also noted that this threshold seemed lower for color advertisements than print advertisements. So color and frequency both play a role in product perceptions.

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. - The last line of the passage informs us that because color ads are more expensive, the point at which color ads seem to be excessive comes sooner than it does for black and white ads.
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Re: According to economic signaling theory, consumers may   [#permalink] 21 Oct 2017, 08:34
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