Which best describes how advertising influences consumer choice in an oligopoly? Advertising coaxes people to buy new products.

Advertising alerts consumers to price reductions.

Advertising undermines competition.

Advertising informs brand knowledge.

The correct answer is D) Advertising informs brand knowledge.

The option that best describes how advertising influences consumer choice in an oligopoly is "Advertising informs brand knowledge."

Under the free market system, there are many companies and products that compete with each other to gain the consumer's preference. That is why companies design complex marketing campaigns that include public relations and advertising. But in oligopolyes, just a few companies dominate the market. In the case of advertising, companies invest large sums of money to create the kind of commercials that attract audiences with the idea that consumers remember the name or the logo of the product and the benefits it produces. What companies want is to convince consumers of the benefits of their brand.

The answer is "C", undermines competition.

In a oligopoly, only few brands dominate the market, making it possible for those brands to have a higher price on their products. An oligopoly also means that all companies have a somewhat similar product to the others, only varying in certain characteristics. That means advertising is mostly important to guarantee consumer loyalty.

To do that, brands try to estabilish superiority by comparing their products to other brands to convince the buyers that theirs is better than the rival's.