00:01
This one may seem a little confusing at first, but it helps if you try to remember that in some cases, consumers, whether it's the end user or an intermediary, sometimes they care much more about price.
00:17
And then there are other times when they care more about quality and the differences between different products, even if they're in the same classification of product.
00:27
Okay.
00:28
So let's try to go through each of these and maybe it'll become more clear.
00:33
So for letter a, a family -owned farm or a family -owned restaurant, which is going to be more likely to engage in advertising? well, the family -owned farm is likely selling to people who are much more concerned about price, in part because they're typically selling to retailers who are then going to sell to the end user.
00:55
Okay.
00:57
There's not a whole lot of, product differentiation and the quality is really a pass or fail issue when a supermarket, let's say, is buying from a farm.
01:06
Either the food is able to be resold or it's not.
01:09
There aren't varying degrees there.
01:12
So someone like that is likely not to engage in advertising, but the family -owned restaurant, they're competing in a market that is not so much concerned about price.
01:24
It's more so concerned about quality and product differentiation because they're in a monopolistically competitive market.
01:32
No one else has the exact same food that restaurant does prepared in the exact same way, but you have a lot of other alternatives to restaurants.
01:42
So for the next one, letter b, a manufacturer of forklifts or a manufacturer of cars...