It is often difficult for a customer to know the quality of a 3-D television. If a television manufacturer advertises its 3-D televisions then:
A)this is a costless action that fails to signal the 3-D television is a good product
B)this is a costless action that succeeds in signalling that the 3-D television is a good product
C)this is a costly action that succeeds in signalling that the 3-D television is a good product
D)this is a costly action that fails to signal the 3-D television is a good product

Question

Quizplus · Accepted Answer

Advertising 3-D televisions is a costly action for manufacturers, as it requires investing in marketing and advertisement campaigns. Therefore, if a manufacturer is willing to incur these costs and promote their 3-D televisions, it signals that they believe their product is of good quality. This can be seen as a form of signaling, indicating to customers that the 3-D television is a good product.

It Is Often Difficult for a Customer to Know the Quality