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One answer is that consumers are not as rational as economists suppose.Their judgements, or even tastes, can be influenced by many irrelevant things such as which celebrity has been hired by the company to endorse its product.However, the main question which comes to the mind is why advertising works even though the money spent on advertising is often regarded as a waste of resources by the society.



Why are consumers still influenced by ads that do not accord with the reality and not provide any information about the product?Meanwhile, other characters get bogged down in the legalities of it all, and there are cheesy songs on the soundtrack and an expectedly heartwarming ending.The cast boast performances from a typically gruff Kris Kristofferson, a cameo from Martin Sheen, and a nice role for Robert Do Qui, a favourite of mine for his performance as the tough chief of police in ROBOCOP.So only a company that has some market power, and therefore can charge a price that is above marginal cost, can gain from advertising.

After this logic, it is not hard to see why many companies spend so much money on it.

As a matter of fact, companies often defend their brand names, suing anyone else who uses them without permission.