Who is more likely to offer a money-back guarantee: a seller of a lemon or a seller of a plum? Why?
What will be an ideal response?
The seller of a plum is more likely to offer a money-back guarantee, because that seller is unlikely to have to honor the guarantee. A seller of a lemon knows that there is a good chance that the buyer will return the car and ask for his or her money back.
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Which of the following is an example of a barrier to entry?
a. Crystal charges a higher price than her competitors for her hair-styling services. b. Dan charges a lower price than his competitors for his dry-walling services. c. Jackie offers free samples of her loose-meat sandwiches to attract new customers. d. Roseanne obtains a copyright for a short story that she wrote and published.
Refer to the graph shown. A quantity restriction of QR will:
A. create excess demand represented by Q2 ? QR. B. reduce quantity supplied to Q2. C. reduce quantity supplied to QR. D. have no effect on quantity supplied.