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Adibok Knows That It Produces and Sells High-Quality Athletic Shoes

Question 230

Multiple Choice

Adibok knows that it produces and sells high-quality athletic shoes. Wurkout knows that it produces and sells low-quality athletic shoes. According to the signaling theory of advertising,


A) both Adibok and Wurkout have incentives to spend large amounts of money on advertising for their athletic shoes.
B) Adibok has an incentive to spend a large amount of money on advertising for its athletic shoes, but Wurkout does not.
C) Wurkout has an incentive to spend a large amount of money on advertising for its athletic shoes, but Adibok does not.
D) neither Adibok nor Wurkout has an incentive to spend a large amount of money on advertising for their athletic shoes.

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