When consumers in the market are willing to pay more for a product despite lack of knowledge regarding the product quality, then price signaling cannot be used.

Question

Quizplus · Accepted Answer

Price signaling can still be used in this scenario, as prices can still convey information about the perceived value of the product to consumers. However, the effectiveness of price signaling may be limited if consumers lack knowledge about the product quality.

When Consumers in the Market Are Willing to Pay More