O-LevelCommerceAdvertising7100/12 · May/June 2014 · Q191 Mark

Why might advertising lead to lower prices?

AAdvertising costs are deducted from product prices.

BCompetition with other manufacturers might be reduced.

CCosts of advertising are lower than production costs.

DIncreased sales can reduce unit costs of production.

✓ Correct answer

D: Increased sales can reduce unit costs of production.

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Topic: Advertising, O-Level Commerce (syllabus 7100). Multiple choice, 1 mark.
Source: O-Level Commerce, May/June 2014 Paper 1 Variant 2, question 19.

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