Which of the following most clearly indicates why the franchiser of a product has a strong incentive to monitor the quality of the product among all of the franchised sellers?
a. The franchiser has a monopoly on the sale of products in his industry.
b. If quality is not maintained, the franchiser will be limited in his ability to sell other franchises and collect franchise fees.
c. If quality is not maintained, the government will prohibit future sales of the franchises.
d. Franchisers do not gain financially by maintaining quality, but they generally maintain quality anyway because they are consumers as well as producers.
B
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Required reserves are
A) the portion of demand deposits and NOW accounts banks must hold. B) zero on demand deposits. C) zero on NOW accounts. D) imposed on all deposits at commercial banks.
Which of the following is not a solution to the problem of negative externalities due to pollution?
a. create private property rights b. levy pollution taxes c. create obligatory controls d. subsidize the production of the goods e. establish strict limits on the amount of pollution allowed