Which Of The Following Statements About Expenditures On Advertising Is True?

(Correct Answer Below)

Which Of The Following Statements About Expenditures On Advertising Is True?

When a firm spends a small amount of money on advertising, this signals that the quality of the good is high. When a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality. If a firm knows its product is of low quality, it will be willing to spend large amounts of money on advertising.
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When a firm spends a large amount of money on advertising, advertising can be construed as a signal of quality.

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