Section 7.11 of your textbook describes how advertising enters firms' strategy.

A.One goal of advertising by firms is to foster brand loyalty, i.e. making current

consumers feel positively toward the firm's brand and be less likely to switch to

competing products. What is the relationship between brand loyalty and the

firm's elasticity of demand?

B.True or False: If firms' advertising achieves the intended effect from part a), then

advertising will lead to a market equilibrium has less Deadweight Loss relative to

the equilibrium with no advertising. Explain your reasoning.

C.One goal of advertising is to attract customers from other products, i.e. expand

the number of customers wanting to buy the firm's product at any given price.

How would achieving this goal affect the shape of the demand curve?

D.Use your answers to a and b to show on a diagram how effective advertising

would change the shape of the firm's demand curve