« previous next »

Author Question: Used car buyers will believe that a car is of good quality when the seller signals the car's high ... (Read 126 times)

formula1

  • Hero Member
  • *****
  • Posts: 666
on: Jul 1, 2018
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?
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


ergserg

  • Sr. Member
  • ****
  • Posts: 338
Reply #1 on: Jul 1, 2018
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
« previous next »
 

Did you know?

Medications that are definitely not safe to take when breastfeeding include radioactive drugs, antimetabolites, some cancer (chemotherapy) agents, bromocriptine, ergotamine, methotrexate, and cyclosporine.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Chronic necrotizing aspergillosis has a slowly progressive process that, unlike invasive aspergillosis, does not spread to other organ systems or the blood vessels. It most often affects middle-aged and elderly individuals, spreading to surrounding tissue in the lungs. The disease often does not respond to conventionally successful treatments, and requires individualized therapies in order to keep it from becoming life-threatening.

Did you know?

A good example of polar molecules can be understood when trying to make a cake. If water and oil are required, they will not mix together. If you put them into a measuring cup, the oil will rise to the top while the water remains on the bottom.

Bipolar disease. The term bipolar means “pertaining to two poles.” The individual with this form of Bipolar disease. The term bipolar means “pertaining to two poles.” The individual with this form of
Nerves can transmit many signals at the same time Nerves can transmit many signals at the same time
High rates of rural poverty have been a part of the United States from its origin to the present. ... High rates of rural poverty have been a part of the United States from its origin to the present. ...
Permafrost: High albedo, reflects as much as 90% of the Sun’s energy Permafrost: High albedo, reflects as much as 90% of the Sun’s energy
Oatmeal and other whole grain cereals are good sources of carbohydrates to start your morning off Oatmeal and other whole grain cereals are good sources of carbohydrates to start your morning off
potatoes as a very good source of vitamin B6 potatoes as a very good source of vitamin B6
Video: Neurosynapse Animation

For a complete list of videos, visit our video library