State whether the following are true or false:

(a) companies spend billions of dollars advertising their products on network tv primarily because the texts of their advertisements persuade consumers that the advertised products are of high quality.
(b) you may not get the optimal level of advice from a retail shop when you go in to buy a lamp for your bike because of the free-rider problem.
(c) if you need a lawyer, and all your legal expenses are covered by insurance, you should always choose the best-dressed lawyer with the most expensive car and the most ostentatiously furnished office.
(d) the benefit of searching for a spouse is affected by the size of the community you live in.

A) False. There are two reasons why this statement would be considered false. First, the main reason why advertising on TV is persuasive is not because of text, but because of factors such as bright colors, lively graphics or celebrity endorsement. Second, advertisements do not always convince people of the high quality of their products. Instead, they try to convince them of factors such as the "trendiness" or popularity of a product.

B) True. It is likely that if you go into a shop without buying anything, the workers might consider you a "free-rider" and thus do not spend a lot of time solving your questions.

C) False. Although lawyers that make a lot of money are generally those who are very successful, this is not always the case. Lawyers, like any other professional, can be talented without being rich or ostentatious, and therefore, this is not the best way to chose a lawyer.

D) True. As you look for a spouse, you have a lot more options when you live in a bigger community. With more options, the chances of you finding a suitable match increase. Therefore, the benefit of searching for a spouse is affected by the size of your community.

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