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.

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Definitions:

Adjusting Entries

Accounting records finalized at the close of an accounting period to properly assign income and expenses to the period they truly belong to.

Annual Accounting Period

A 12-month time span used by businesses for financial reporting and accounting purposes.

Chart of Accounts

A systematic listing of all ledger account names and numbers used by a company, organized by the assets, liabilities, equity, revenue, and expenses.

Closing Entry

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts and prepare the company's books for the next period.