Question

In each of the following cases, explain how the advertisement functions as a signal to a potential buyer. Explain what information the buyer lacks that is being supplied by the advertisement and how the information supplied by the advertisement is likely to affect the buyer's willingness to buy the good. a. "Looking for work. Excellent references from previous employers available." b. "Electronic equipment for sale. All merchandise carries a one-year, no- questions-asked warranty." c. "Car for sale by original owner. All repair and maintenance records available."

Short answer

#tag_title#d. "Freshly baked bread for sale. Made with locally-sourced organic ingredients." #tag_content#A potential buyer lacks information about the quality and origin of the ingredients used in the bread. The advertisement provides a signal to the buyer that the bread is made with locally-sourced organic ingredients, indicating a higher quality product and support for local businesses. This information will increase the potential buyer's willingness to purchase the freshly baked bread due to perceived health benefits, superior flavor, and community support.

Step-by-step solution

a. "Looking for work. Excellent references from previous employers available."

A potential employer lacks information about the job applicant's past work experience and credibility. The advertisement provides a signal to the employer that the potential employee can provide excellent references from previous employers, indicating a reliable and likely skilled worker. This information will increase the potential employer's willingness to consider hiring the applicant due to confidence in their work abilities and reliability.

b. "Electronic equipment for sale. All merchandise carries a one-year, no-questions-asked warranty."

A potential buyer lacks information about the quality and reliability of the electronic equipment being sold. The advertisement provides a signal to the buyer that the equipment comes with a one-year, no-questions-asked warranty, giving the buyer a sense of security and confidence in the product's quality. This information will increase the potential buyer's willingness to purchase the electronic equipment because they know that if any problems arise within the first year, they will be protected by the warranty.

c. "Car for sale by original owner. All repair and maintenance records available."

A potential buyer lacks information about the car's maintenance history, the original owner's credibility, and how well the car has been taken care of. The advertisement provides a signal to the buyer that the car is being sold by the original owner and all repair and maintenance records are available. This information will increase the potential buyer's willingness to purchase the car because it shows that the car has been properly maintained and the original owner is transparent about its history.