Author Question: A downtown diner daily serving the same business people will be more likely to serve a tasty lunch ... (Read 42 times)

Haya94 · **on:** Jul 1, 2018

A downtown diner daily serving the same business people will be more likely to serve a tasty lunch than a snack bar at a tourist attraction.

What will be an ideal response?

Question 2

If sellers of good cars and sellers of lemons both offer a warranty on their cars, consumers will then be able to tell which cars are the lemons.

Indicate whether the statement is true or false

bulacsom · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

True. The diner will benefit from a good reputation with consumers. The business people will repeatedly visit a good diner. The snack bar at the tourist attraction will usually only serve consumers once. There is no need to build a good reputation.

Answer to Question 2

False. The lemon owners are sending a false signal that consumers cannot detect. There is still nothing to distinguish a lemon from a good car.