Which of the Following Is TRUE About Producers' Willingness to Offer

question 129

Multiple Choice

Which of the following is TRUE about producers' willingness to offer warranties on products?

• A) Producers are equally likely to offer warranties on high-quality and low-quality goods.
• B) Producers are more likely to offer warranties on low-quality goods, because without the signal that the warranty provides, the low-quality good wouldn't sell.
• C) Producers are more likely to offer warranties on high-quality goods, because the expected cost of repairs is lower for those goods.
• D) Producers have an incentive to deal with third-party companies to provide the warranties, so that an "impartial" view of the product is given to the consumer.
• E) Producers will not offer warranties in any market that suffers from asymmetric information.

---

Definitions:

Nominal GDP

The production of goods and services valued at current prices.

Sustainable

The quality of not being harmful to the environment or depleting natural resources, thereby supporting long-term ecological balance.

Substitution Effect

The change in consumption patterns due to a change in relative prices, where consumers substitute away from more expensive goods towards cheaper ones.

Income Effect

The alteration in the income of an individual or an economy and its impact on the demand for a specific good or service.