Which of the following statements about expenditures on advertising is true? a

Which of the following statements about expenditures on advertising is true?

a. When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. ??

b. If firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising.

c. When a firm spends a large amount of money on advertising, advertising can be constructed as a signal of quality. ??

If a firm knows its product is not of high quality, it would want to limit unnecessary exposure as much as possible. Also, if the product's quality is low, revenue expectations are already much lower to begin with. Therefore, there is no need to spend lots of money on advertising.