Which of the Following Events Best Exemplifies the Concept of Signaling

question 163

Multiple Choice

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

• A)A college student's parents, having learned that their child is short of money, send her a check for $1,000.
• B)A new company making high quality bicycles at a reasonable price sends free bikes to reviewers working for bicycle magazines.
• C)A grocery store maintains a policy of examining the driver's license of everyone who writes a personal check to purchase his groceries.
• D)A university maintains a policy of considering for admission only those students who graduated among the top 10 percent of their high school class.

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Definitions:

Market Price

The prevailing market rate at which a service or asset can be purchased or sold, influenced by the balance of supply and demand.

Marginal Cost

The additional cost incurred from producing one more unit.

Average Revenue

The revenue received per unit of goods or services sold.

Minimize Losses

A strategy or approach aimed at reducing the amount of losses incurred in a business or investment.