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.
b
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When we graph consumption as a function of national income rather than as a function of ________, the slope of this consumption function is the ________
A) disposable income; MPC B) personal income; MPS C) disposable income; MPS D) personal income; MPC
Suppose the value of the CPI is 1.100 in year one, 1.122 in year two, and 1.133 in year three. Assume also that the price of computers increases by 3 percent between year one and year two, and by another 3 percent between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.
A. decreasing; increasing B. decreasing; decreasing C. increasing; decreasing D. increasing; increasing
A good is said to be overproduced in an economy if
A. the social marginal cost exceeds the social marginal benefit. B. the production of the good generates a positive externality. C. the marginal cost of producing the good is less than its price. D. the marginal benefit derived from the consumption of the good is more than the price.
You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 ? 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged to maximize profits?
A. $60.5 B. $20.5 C. $40.5 D. $80.5