How can a warranty at the seller's expense signal that a product ...

[EY67]

How can a warranty at the seller's expense signal that a product is high quality?
 
  What will be an ideal response?

Question 2

The social interest theory of regulation suggests that the political process and regulations will ________ and the capture theory of regulation suggests that the political process and regulations will ________.
 
  A) seek to minimize deadweight loss; serve the interests of the producers
  B) try to maximize the producers' economic profits; seek to minimize deadweight loss
  C) be unaffected by deadweight loss; increase the firms economic profits
  D) ignore producers' interests and concentrate on consumers' interests; seek to minimize firms' economic profits

[makaylafy]

Answer to Question 1

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.

Answer to Question 2

A