With asymmetric information firms might be reluctant to improve the quality of their products because
A) it costs them more to produce the better quality product.
B) they are not able to completely capture the benefits of the improvement.
C) consumers do not value the better product.
D) consumers are better informed about the product and value the new product less.
B
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Which pair of goods is most likely to have a negative cross-price elasticity?
A. All cross-price elasticities are negative, but often reported in absolute value. B. Peanut butter and jelly. C. Butter and margarine. D. Milk and pencils.
Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then at a price of $2.00 per pound, the market demand for hamburger is:
A. 8 pounds per week. B. 4 pounds per week. C. 2 pounds per week. D. 6 pounds per week.
Draw a graph showing a short-run average variable cost curve, a short-run average total cost curve, and a short-run marginal cost curve. Briefly explain the shape of each curve and how they relate to each other.
What will be an ideal response?
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________
A) definitely falls, is indeterminate B) is indeterminate, definitely falls C) definitely falls, definitely rises D) definitely rises, is indeterminate