Which of the following can be a possible result of advertising as an instrument to deter entry? I. If advertising tends to create goodwill, it will decrease a potential entrant's profits. II. If advertising tends to lock in an incumbent's customers, its pricing response to entry will not be very harsh.

MCQs on major topics and theories in the field of Industrial Organization. Topics include: Market structure analysis and the strategic behaviors of competing firms, including (but not limited to) product differentiation, collusion, price discrimination, pricing strategy, non-price discrimination (i.e. advertising), horizontal mergers, vertical integration, and vertical restraints.