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# According to economic signaling theory, consumers may perceive the

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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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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:
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
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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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?
<"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 >

<"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 perceive the [#permalink]
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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
.

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

Hope this helps!!
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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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 perceive the [#permalink]
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P1 - frequently advertised brand means good one. but it is actually a bit better so that cost invested on ads can be obtained.
P2 - 3 studies by K for factors affect consumers.

1) Which of the following best describes the purpose of the highlight sentence?
PT - these lines are explaining prior sentence.
E) To offer an explanation for an observation reported by Marquardt and McGann -

---------------------------------------

2) The primary purpose of the passage is to
A) present findings that contradict one explanation for the effects of a particular advertising practice - no
B) argue that theoretical explanations about the effects of a particular advertising practice are of limited value without empirical evidence - no
C) discuss how and why particular advertising practices may affect consumers' perceptions - seems like best choice covering whole thing.
D) contrast the research methods used in two different studies of a particular advertising practice - no
E) explain why a finding about consumer responses to a particular advertising practice was unexpected - no;

-------------------------------------------

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. -

------------------------------------

4) Kirmani's third study, as described in the passage, suggests which of the following conclusions about a black-and-white advertisement?

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.

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.

-------------------------------------

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?

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.

D) The frequency of advertisement is not always perceived by consumers to indicate that manufacturers are highly confident about their products' quality.
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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I would like to understand the error in choice A in question 2 about primary purpose of the passage.

Thanks
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
Gmat Ninja - Can you explain why 4 E is wrong ?
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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Question 4

nikitamaheshwari wrote:
Gmat Ninja - Can you explain why 4 E is wrong ?

First, let's take a look at the relevant parts of the passage. Kirmani's first two studies tell us:

...at some level of spending the manufacturer's advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality.

So, a manufacturer cannot advertise their product too often without being seen to have low confidence in their product's quality and this effect happens more quickly in colorful print advertisements than in black and white advertisements.

Let's take a look at (E) to see why it is not the correct answer:
Quote:
(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.

The passage tells us that consumers will perceive low manufacturer confidence in the quality of an advertised product if the advertisement is seen too regularly. Also, there is a different threshold for what too regularly means for color and black-and-white advertisements.

Also, we aren't given any information that would help us determine whether the difference in the colorfulness of a single advertisement indicates higher or lower manufacturer confidence in a product.

Therefore, we cannot say that (E) is a conclusion about a black-and-white advertisement we can take from Kirmani's third study, so (E) is not the right answer.

Compare this to (A):
Quote:
(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.

We're told in the passage that excessive advertising can indicate low manufacture confidence in their product's quality. Also, a color advertisement can be repeated fewer times than a black-and-white advertisment before it is "perceived as excessive." This is the same as saying a black-and-white advertisement can be repeated more frequently than a color advertisement before it is seen as excessive.

(A) is a rephrasing of the conclusion given for Kirmani's third study at the end of the passage -- this is why (A) is a correct conclusion about a black-and-white advertisement and why (A) is the correct answer to this question.

I hope that helps!
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
I request someone to Kindly explain question 5 in detail. Thanks in advance!
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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pranjalsethi wrote:
I request someone to Kindly explain question 5 in detail. Thanks in advance!

Hey pranjalsethi,

For question 5, lets first try to break the question stem and understand what the question is actually asking for -

Quote:
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?

If you read the above bolded and highlighted part, you can make out that the question is asking that Kirman, a person mentioned in the passage, will agree on something about consumer's perceptions of a relation between advertisement frequency of a product and quality of the same product from the below options. So which one option can he likely agree to.

Before, we move on to the options, we should quickly just jump back to the passage to find what Kirman implies [means] on the relation between frequency and quality of the product. So we refer to the following excerpt from the passage -

If consumers perceive excessive advertising effort as a sign of a manufacturer's desperation, the result may be less favorable brand perceptions

This means that Kirman believes, if a manufacturer is EXCESSIVELY ADVERTISING, then he MIGHT NOT BE CONFIDENT in the product's quality

I have highlighted the word 'Might' here to help understand that excessive advertising does not all the time mean bad quality, but most of the times it could mean.

Now with this understanding let's look at the options -

Quote:

Frequency is the primary concern ???
As per the passage, kirman at no point mentions it to be a primary consideration.
Moreover, we should be wary of such words in the options. Such words, until explicitly mentioned, are part of the wrong option choices.
Incorrect

Quote:
(B) Because most consumers do not notice the frequency of advertisement, it has little impact on most consumers' expectations regarding product quality.

Most consumers do not notice ???
They do notice, that is what Kirman studies say. This seems to be in a conflict with the passage.
Incorrect

Quote:

Nowhere in the passage, can we see kirman mentioning different expectations of consumers as per the age of the product in the market.
Out of Scope. Incorrect

Quote:
(D) The frequency of advertisement is not always perceived by consumers to indicate that manufacturers are highly confident about their products' quality.

By POE, we are left with this one only, but just to understand this, lets see what does it say -
Frequency of advertisement -> Not always perceived by consumers -> indicator -> manufacturers are highly confident about their products' quality

Yes this exactly what Kirman is meaning to say. [Matches what we inferred above before moving to the options]. Correct

Quote:
(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.

Similar to option (C).
Nowhere in the passage, can we see kirman mentioning different expectations of consumers as per the age of the product in the market.
Out of Scope. Incorrect
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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Official Explanation

1) Which of the following best describes the purpose of the highlight sentence?

Difficulty Level: Easy

Explanation

Logical structure

Marquardt and McGann found a correlation between highly advertised products and high-quality products. The connection can be explained by understanding that companies may invest heavily in such advertising, anticipating that recurring purchases of high-quality products will eventually recover these advertising costs. Consumers will continue to buy these products over time because of loyalty to their high quality. The statement in bold provides this explanation for the correlation noted by Marquardt and McGann.

A. The sentence does not explain a failure of the economic signaling theory.

B. Economic signaling theory is about perceptions of quality, but this explanation is about actual quality and its correlation with advertising.

C. No exception is mentioned in Marquardt and McGann’s work.

D. The sentence does not examine why or how the research was undertaken.

E. Correct. This statement provides an explanation of why highly advertised products did indeed rank high on certain measures of product quality.

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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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Official Explanation

2) The primary purpose of the passage is to

Difficulty Level: Hard

Explanation

Main idea

The primary purpose can be determined only by evaluating the whole passage. The first paragraph discusses consumers’ perceptions of quality based on frequency of advertising. The second paragraph discusses three studies that show how consumers base their evaluations of products on the kinds of advertising they see. Therefore, the purpose of the whole passage is to show how consumers’ perceptions of products are shaped by certain advertising practices.

A. The passage shows that expensive advertising works to a certain point, but not after it; this method examines a continuum, not a contradiction.

B. Most of the passage is devoted to empirical evidence.

C. Correct. The passage shows how the frequency and the kind of advertising influence consumers’ perceptions about the quality of the products advertised.

D. The passage reports the findings of four studies but does not mention research methods.

E. The passage does not indicate that any of the findings were unexpected.

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Re: According to economic signaling theory, consumers may perceive the [#permalink]
Official Explanation

3) Kirmani's research, as described in the passage, suggests which of the following regarding consumers' expectations about the quality of advertised products?

Difficulty Level: Easy

Explanation

Inference

The question’s use of the word suggests means that the answer depends on making an inference. This research is discussed in the second paragraph. Kirmani found that too much advertising tended to make the consumers believe that manufacturers were desperate. The use of color was also found to affect consumers’ perceptions of brand quality. Realizing that color advertising is more expensive than black-and-white, consumers react more quickly to what they perceive to be its overuse than they do to a repetition of black-and-white advertisements.

A. This situation is not discussed in the research, at least as it is reported in this passage.

B. Correct. It can be inferred that consumers’ perceptions of product quality are influenced by the use of color in an advertisement and by the frequency of the advertisement’s appearance.

C. The research does not make a distinction between new and familiar brands.

D. The research indicates only that consumers can tolerate black-and-white advertisements for a longer time than color advertisements before dismissing them as excessive.

E. There is no discussion of what consumers learn from other sources.

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Re: According to economic signaling theory, consumers may perceive the [#permalink]
Official Explanation

4) Kirmani's third study, as described in the passage, suggests which of the following conclusions about a black-and-white advertisement?

Difficulty Level: Easy

Explanation

Inference

Kirmani’s third study is discussed in the final two sentences. Consumers suspect expensive advertising results from a manufacturer’s lack of confidence in the quality of the product. Consumers reach the point at which they find advertising excessive more quickly with color advertising than with black-and-white advertising because they understand that the addition of color increases advertising expenses. It is reasonable to infer that the reverse is also true and thus that consumers will tolerate lengthier repetitions of black-and-white advertising without becoming suspicious of product quality.

A. Correct. Consumers find color advertising excessive more quickly and thus can be expected to find black-and-white advertising excessive less quickly.

B. The study does not discuss concurrent appearances of color and black-andwhite advertisements for the same product.

D. It is stated that consumers understand that color advertisements are more expensive.

E. The research certainly does not report this finding.

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Re: According to economic signaling theory, consumers may perceive the [#permalink]
Official Explanation

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?

Difficulty Level: Medium to Hard

Explanation

Inference

The first sentence of the second paragraph provides the answer to this question: at some level of spending the manufacturer’s advertising effort may be perceived as unreasonably high, implying low manufacturer confidence in product quality. Thus, it is logical to assume that if a product is advertised too frequently, consumers may believe that the manufacturer is spending excessive amounts on advertising because that manufacturer is not confident of the product’s quality.

A. Kirmani’s research, as reported here, does not support this claim.

B. Kirmani’s research examines how consumers respond to the frequency of advertising; the research does not indicate that consumers do not notice frequency.

C. The research does not distinguish between new and familiar products.

D. Correct. Excessive advertising may lead consumers to believe that the manufacturer lacks confidence in the quality of the product.

E. Kirmani’s research does not specifically address new products.

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According to economic signaling theory, consumers may perceive the [#permalink]
KarishmaB GMATNinja

Could you please help me with question 2 - The primary purpose of the passage is to

(A) present findings that contradict one explanation for the effects of a particular advertising practice
(C) discuss how and why particular advertising practices may affect consumers' perceptions

Option A - My reasonings to reject this choice are firstly, the studies are not contradicting but LIMITING the findings. Secondly, option A says contradict explanation whereas I guess the studies are limiting the conclusion and not the explanation. It is not attacking the explanation.

Explanation here is last line of PARA1.
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Re: According to economic signaling theory, consumers may perceive the [#permalink]
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waytowharton wrote:
KarishmaB GMATNinja

Could you please help me with question 2 - The primary purpose of the passage is to

(A) present findings that contradict one explanation for the effects of a particular advertising practice
(C) discuss how and why particular advertising practices may affect consumers' perceptions

Option A - My reasonings to reject this choice are firstly, the studies are not contradicting but LIMITING the findings. Secondly, option A says contradict explanation whereas I guess the studies are limiting the conclusion and not the explanation. It is not attacking the explanation.

Explanation here is last line of PARA1.

Yes, you are right. The findings are not contradicting the theory and its explanation. They are only limiting it to a certain extent.
The studies are not questioning the impact of impact of heavy advertising. They are questioning the impact of extremely heavy advertising.

Also, if (A) were the purpose, then the discussion on 'colour paper ads' becomes out of scope.

Option (C) encompasses it all properly.
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