Author Question: Used car buyers will believe that a car is of good quality when the seller signals the car's high ... (Read 129 times)

formula1

  • Hero Member
  • *****
  • Posts: 666
Used car buyers will believe that a car is of good quality when the seller signals the car's high quality by offering a warranty when
 
  A) a warranty on a lemon is costly to the seller.
  B) warranties are offered on all cars.
  C) warranties are only offered on lemons.
  D) a warranty on a good car is a false signal.

Question 2

Explain how product liability laws can reduce adverse selection.
 
  What will be an ideal response?


ergserg

  • Sr. Member
  • ****
  • Posts: 338
Answer to Question 1

A

Answer to Question 2

Product liability laws force producers to compensate consumers that purchase a defective product. This eliminates the producer's ability to profit from asymmetric information.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

The most common treatment options for addiction include psychotherapy, support groups, and individual counseling.

Did you know?

Prostaglandins were first isolated from human semen in Sweden in the 1930s. They were so named because the researcher thought that they came from the prostate gland. In fact, prostaglandins exist and are synthesized in almost every cell of the body.

Did you know?

Your heart beats over 36 million times a year.

Did you know?

The tallest man ever known was Robert Wadlow, an American, who reached the height of 8 feet 11 inches. He died at age 26 years from an infection caused by the immense weight of his body (491 pounds) and the stress on his leg bones and muscles.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

For a complete list of videos, visit our video library