How can a warranty at the seller's expense signal that a product is high quality?
What will be an ideal response?
If the product is low quality, the warranty would be very costly for the seller to uphold. Low quality products would need numerous repairs for which the seller would be required to pay. Thus, warranties are not likely to be offered on low quality products.
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In a monopolistically competitive market, having a large number of firms in the market means that
A) no firm attempts to take into account the reaction of rival firms. B) individual firms will have a large portion of the market giving them monopoly power. C) firms will get together and collude because this will be the only way to earn monopoly profits. D) firms will cooperate with each other to drive competitors out of the market.
Which of the following is a normative statement?
A) An increase in consumer income will lead to increased sales of beef. B) A decrease in the rate of unemployment will lead to upward pressure on consumer prices. C) An increase in the income tax will cause a greater reduction in savings than an increase in the sales tax. D) An economy with high unemployment can be worse off than an economy with high inflation.