In equilibrium, consumers will incur costs to signal their type (in markets with adverse selection) only if this results in a price that is lower than the pooling equilibrium price.

Answer the following statement true (T) or false (F)

False

Rationale: It is possible to have equilibria in which all consumers -- both high and low cost -- signal that they are low cost. Thus, no information is revealed and the pooling price remains. (This can happen when the cost of falsely signaling information is too low -- and when firms believe that no signal is equivalent to a signal of a high cost type.)