Briefly describe how warranties send a signal.
What will be an ideal response?
Warranties are a signal. Honest and reliable firms find it less expensive to provide a warranty than dishonest firms do. The dilemma for consumers is that they are trying to distinguish the good brands from the bad brands. One way to do this is to see what kind of warranty the producer offers. Low-quality items would require more frequent and expensive servicing than high-quality items. Thus, producers of low-quality items will tend not to offer extensive warranties. In short, extensive warranties signal high quality, while items without extensive warranties signal poor quality. With this knowledge, consumers will pay more for high-quality products with good warranties.
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Taxing savings will cause people to save more.
A. True B. False C. Uncertain
Credit cards do not fulfill the three functions of money
Indicate whether the statement is true or false
A discouraged worker is: a. one who opts to quit work to attend college
b. one who opts to quit searching for work after unsuccessfully seeking employment. c. a part-time worker who would like to work more hours. d. none of the above.
For a firm in a perfectly competitive industry,
A) both short-run and long-run economic profits may be negative.
B) short-run economic profits must be zero.
C) short-run economic profits may be positive, but long-run economic profits must be zero.
D) short-run and long-run economic profits must be zero.