Question 1

Which of the following is not an example of signaling?

Accepted Answer

The answer of Which of the following is not an...

Question 2

Which of the following is an example of signaling?

Accepted Answer

All of the given options are examples of signaling. A graduate of a highly-respected university signals their educational achievement by highlighting it on their resume. The phrase "as seen on TV" in magazine advertisements signals the popularity and recognition of a product. Advertisements for universities including the phrase "fully accredited" signals the quality and legitimacy of the institution's educational programs.

Question 3

A brand of wine is priced at only $5 per bottle,far below the market price of most high quality wines.Before any reputation exists for the wine,consumers buy very little of this inexpensive wine because they interpret the low price to mean that the wine is of poor quality.The company decides to change the label on the wine to show that it has won awards for quality.This label change is an example of

Accepted Answer

The label change is an example of signaling, which is a way for the company to communicate information to consumers about the quality of their product. By adding information about awards for quality, the company is signaling to consumers that the wine is of higher quality than they might have previously assumed based on its low price. Screening and selecting are not relevant in this scenario.

Question 4

A safe driver would likely choose an auto insurance policy with a

Accepted Answer

A safe driver would likely choose an auto insurance policy with a low premium and a high deductible because they have a low likelihood of getting in an accident, so paying a lower premium is a more cost-effective option. Additionally, a high deductible encourages safe driving habits because the driver will be more cautious since they will be responsible for a larger portion of the repair costs in case of an accident.

Question 5

If the seller of a used car offers a limited warranty,the warranty is an example of a(n)

Accepted Answer

A warranty serves as a signal of the quality of the used car being sold by the seller. It provides a guarantee to the buyer that the car will function properly for a certain period of time and helps to reduce the asymmetry of information, which can be an issue in the market for used cars.

Question 6

A home has been on the market for an extended amount of time without much interest from buyers.The sellers decide to purchase and include a home warranty insuring against major defects with the home.The warranty is an example of a(n)

Accepted Answer

The home warranty is a signal to potential buyers that the sellers are confident in the condition of the home and are willing to back it up with a warranty. This may increase the attractiveness of the home and generate more interest from buyers.

Question 7

Screening occurs when

Accepted Answer

Screening occurs when an uninformed party acts to induce the informed party to reveal private information. This is often seen in situations such as job interviews, where the employer is trying to determine the qualifications and abilities of the potential employee. The employer may ask questions or give tests in order to gather information and screen out candidates who are not a good fit for the position.

Question 8

Which of the following is an example of screening?

Accepted Answer

The answer of Which of the following is an example...

Question 9

"Signaling" refers to actions by an informed party for the sole purpose of

Accepted Answer

Signaling refers to actions taken by an informed party to credibly reveal private information to another party. This is done to influence the behavior of the other party and can help to mitigate issues related to information asymmetry.

Question 10

Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost.Miller Brewing Co.typically does not advertise during the Super Bowl.Which of the following is correct?

Accepted Answer

Budweiser chooses to advertise during the Super Bowl as a way to signal its brand's dominance and reach a large audience. Miller Brewing Co. has chosen not to advertise during the Super Bowl, potentially due to cost or a different marketing strategy.

Question 11

A firm with a very good product

Accepted Answer

A firm with a very good product has more to gain by signaling (advertising) than does a firm with an inferior product. This is because a good product can command a higher price and generate more revenue if it is effectively marketed and advertised. Therefore, the firm with a good product has a greater incentive to allocate resources to signal its product's quality to potential customers.

Question 12

Scott's Painting Company paints houses.Since Scott's business does not have the name recognition of some of the bigger painting companies,Scott advertises a "Five-Year Money Back Guarantee" to indicate to buyers that his service is of high quality.This guarantee is an example of

Accepted Answer

The "Five-Year Money Back Guarantee" is an example of signaling, as it is a costly signal that Scott's Painting Company is confident in the quality of their service and is willing to offer compensation if the customer is not satisfied. This signal can help overcome the lack of name recognition and build trust with potential customers.

Question 13

An insurance company that writes automobile policies tries to separate safe drivers from risky drivers by offering policies that feature different deductibles and different premiums.This practice is best described as an example of

Accepted Answer

This practice of offering different deductibles and premiums to separate safe drivers from risky drivers is an example of screening, which is a method used by insurance companies to identify and separate risks based on certain variables.

Question 14

Which of the following is an example of screening?

Accepted Answer

Screening involves gathering information to determine if someone or something meets certain criteria or standards. In this example, the employer is checking references to screen the applicant and determine if they have the necessary work habits. The other examples involve information imbalances but not necessarily screening.

Question 15

Effective signals

Accepted Answer

The answer of Effective signals
...

Question 16

Which of the following is an example of signaling?

Accepted Answer

Buying Chaquila chocolates and taking her to dinner at her favorite restaurant are examples of signaling, as they are actions taken by Marcus to communicate his love and commitment to her before proposing marriage. Options A, B, and C are not examples of signaling as they are requirements or precautions taken by third parties (auto mechanic, doctor, firm) before taking an action (buying car, writing policy, hiring).

Question 17

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy.This requirement is an example of

Accepted Answer

This requirement for a medical exam is an example of screening, which refers to the process of sorting potential customers into different categories based on their risks or likelihood of needing to use insurance benefits. In this case, the medical exam helps the insurance company assess the applicant's health risks and determine an appropriate premium for the policy.

Question 18

Which of the following events best exemplifies the concept of signaling?

Accepted Answer

The answer of Which of the following events best exemplifies...

Question 19

Which of the following is not an example of signaling?

Accepted Answer

Screening is not related to signaling. Screening refers to a process of selecting qualified candidates for a job or program based on their abilities and qualifications. Signaling, on the other hand, refers to a process of conveying information about oneself to others through various means, such as educational degrees, job titles, and other observable traits. The other options - advertising, getting an education, and gift giving - all involve signaling in different ways.

Question 20

A woman gives her boyfriend a birthday present.The gift could be viewed by the boyfriend as a

Accepted Answer

The act of giving a thoughtful birthday present can be seen as a signal of how much the woman cares for her boyfriend. It is not necessarily a moral hazard problem or a screening device.

Quiz 22: Frontiers of Microeconomics

Which of the following is not an example of signaling?

Which of the following is an example of signaling?

A safe driver would likely choose an auto insurance policy with a

If the seller of a used car offers a limited warranty,the warranty is an example of a(n)

A home has been on the market for an extended amount of time without much interest from buyers.The sellers decide to purchase and include a home warranty insuring against major defects with the home.The warranty is an example of a(n)

Screening occurs when

Which of the following is an example of screening?

"Signaling" refers to actions by an informed party for the sole purpose of

Budweiser typically purchases several 30 second advertising spots during the Super Bowl at a very high cost.Miller Brewing Co.typically does not advertise during the Super Bowl.Which of the following is correct?

A firm with a very good product

Scott's Painting Company paints houses.Since Scott's business does not have the name recognition of some of the bigger painting companies,Scott advertises a "Five-Year Money Back Guarantee" to indicate to buyers that his service is of high quality.This guarantee is an example of

An insurance company that writes automobile policies tries to separate safe drivers from risky drivers by offering policies that feature different deductibles and different premiums.This practice is best described as an example of

Which of the following is an example of screening?

Effective signals

Which of the following is an example of signaling?

A life insurance company requires new applicants to have a medical exam prior to writing the insurance policy.This requirement is an example of

Which of the following events best exemplifies the concept of signaling?

Which of the following is not an example of signaling?

A woman gives her boyfriend a birthday present.The gift could be viewed by the boyfriend as a