« 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 133 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?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

Did you know?

Certain topical medications such as clotrimazole and betamethasone are not approved for use in children younger than 12 years of age. They must be used very cautiously, as directed by a doctor, to treat any child. Children have a much greater response to topical steroid medications.

Did you know?

The largest baby ever born weighed more than 23 pounds but died just 11 hours after his birth in 1879. The largest surviving baby was born in October 2009 in Sumatra, Indonesia, and weighed an astounding 19.2 pounds at birth.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates’s recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

The eye muscles are the most active muscles in the whole body. The external muscles that move the eyes are the strongest muscles in the human body for the job they have to do. They are 100 times more powerful than they need to be.

Phytochrome controls germination by responding to red/far red light signals. Phytochrome controls germination by responding to red/far red light signals.
Electroencephalography (EEG). To perform the EEG, electrodes attached to the patient’s head pick up Electroencephalography (EEG). To perform the EEG, electrodes attached to the patient’s head pick up
Soil Quality Soil Quality
Rank-order correlations show that differential consistency remains high from childhood through late ... Rank-order correlations show that differential consistency remains high from childhood through late ...
Quality Control Microbiology Quality Control Microbiology
Kidney beans, steak, and iron-fortified bread and cereal are good sources of iron Kidney beans, steak, and iron-fortified bread and cereal are good sources of iron
Video: Arthritis

For a complete list of videos, visit our video library