Effective signals
A)convey useful information from informed parties to uninformed parties.
B)impose little or no cost on the signaler.
C)cannot be conveyed accurately when there is an information asymmetry.
D)raise the quantity sold but reduce the price sellers receive.

Question

Quizplus · Accepted Answer

Effective signals are those that convey useful information from informed parties to uninformed parties. This helps to reduce information asymmetry and improve the efficiency of the market. Signals that do not convey useful information, or that are costly to the signaler, are less effective in achieving these goals. Effective signals can lead to higher quantity sold and higher prices for sellers, as buyers are willing to pay more for goods or services that they perceive to be of high quality.

Effective Signals