TRUE/FALSE
Critics of advertising maintain that society is not better off with advertising because it “shuffles existing total demand” rather than expanding total demand that would stimulate the economy.
The correct answer and explanation is :
TRUE
Critics of advertising often argue that advertising does not necessarily increase the total demand in the economy, but rather redistributes existing demand among different products and services. This perspective suggests that instead of expanding the overall economic pie, advertising simply shifts consumer preferences from one brand to another.
The key idea behind this criticism is that advertising’s role is often seen as persuasive, encouraging consumers to buy one product over another, rather than creating entirely new demand for goods and services. Instead of increasing consumption overall, advertising is believed to influence consumer behavior by encouraging them to choose different options within the same category of products, such as choosing one type of soda over another or one brand of smartphone over another. In this sense, advertising acts as a tool for shifting demand rather than expanding it.
Additionally, some critics argue that advertising can lead to market saturation, where an overemphasis on certain goods results in diminishing returns in terms of economic growth. For instance, as consumers are bombarded with messages that encourage constant consumption, the actual impact on economic growth might be minimal if the demand merely shifts from one product or service to another without a real increase in overall spending or output.
In contrast, proponents of advertising believe it can stimulate the economy by increasing awareness of new products and innovations, thereby driving more consumer spending. However, the critics’ viewpoint remains significant, emphasizing that advertising’s impact might be more about redistributing demand rather than creating new demand that stimulates the broader economy.
Here is a visual representation showing the difference between expanding total demand and shifting existing demand. On the left, you can see the concept of increasing overall economic growth, while on the right, demand is being shifted between similar products and brands, illustrating how advertising can simply shuffle existing demand rather than stimulate new growth.