Which of the following is a possible market solution to the lemons problem?
A) Producers might offer product guarantees and warranties.
B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products.
C) Government agencies might be charged with directly overseeing production and distribution of certain products.
D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.
A
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Why is the following statement incorrect: "A tax on all consumption goods is efficient because it equally taxes all goods and therefore does not distort their prices."
What will be an ideal response?
The average cost curve for a natural monopoly is downward sloping where it intersects the market demand curve
a. True b. False
A cartel is
a. a group of firms promoting competition. b. most common in monopolistic competition. c. a collusive group of firms. d. no longer possible in our global economy.
Suppose, for whatever reason, the trade deficit of the United States with Europe is projected to fall and that before this happens the exchange rate between the euro and the dollar is .75 euros/dollar. The resulting exchange rate would likely
A. fall to (perhaps) .6 euros/dollar. B. rise to (perhaps) .9 euros/dollar. C. cause the exchange rate to have to be expressed in dollars per euro (because the other way would no longer make sense). D. remain unchanged.