Monopolistic Competitors Often Hire a Celebrity Spokesperson to Advertise Their

Monopolistic competitors often hire a celebrity spokesperson to advertise their product. One reason such advertising works is that:

A) celebrities are better informed about the relative merits of different products than the rest of us.
B) consumers assume that the celebrity has researched the product and that the claims being made on his or her behalf are true.
C) the fact that a firm is willing to pay the large fees associated with celebrity advertising signals consumers that it is a major company and that it is therefore likely to have a reliable product.
D) celebrities encourage other firms to enter the industry.

Correct Answer:

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