The seller of an existing house claims that it is in great shape, and he is offering a 2-year warranty on the house. His statements about the quality of his house are likely to be:
A. overstated.
B. true because offering a warranty is a costly-to-fake signal.
C. credible even in the absence of a warranty.
D. untrue because otherwise he would not offer the warranty.
Answer: B
Economics
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A "rational terrorist" will react to the increased security at U.S. airports by
A. attacking U.S. airports. B. attacking other highly-defended targets. C. ending all attacks. D. attacking other high value U.S. interests outside the U.S.
Economics
If Portuguese wines are an inferior good, higher incomes will cause:
A. an increase in the demand for Portuguese wines. B. a decrease in the quantity demanded for Portuguese wines. C. a decrease in the demand for Portuguese wines. D. an increase in the quantity demanded for Portuguese wines.
Economics