You should give up your right-of-way when ______.

The correct understanding of when to give up your right-of-way is centered on safety and traffic regulations. Giving up your right-of-way is appropriate in scenarios where the safety of others is prioritized. In the case where there are pedestrians waiting to cross, it is essential to yield to them, as their safety should always come first. Traffic laws generally require drivers to allow pedestrians to cross the street, recognizing that they have the right-of-way in such situations.

Other scenarios, while relevant to right-of-way rules, do not carry the same immediacy of safety. For instance, if another driver is signaling to merge, they may be indicating their intention to enter your lane, but you are not obliged to yield unless the situation warrants it based on traffic conditions. Similarly, a yellow light indicates that the signal is about to change, which may require caution but does not itself necessitate yielding.

In summary, yielding to pedestrians reflects a fundamental traffic law that prioritizes the safety of the more vulnerable road users, making it the correct choice.